Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ

Tuesday, January 12, 2010

Pakistan's Twin Energy Shortages of Gas and Electricity

Hagler Bailly, a global management consulting firm with an office in Islamabad, warned in a 2006 study that Pakistan is going to witness gas shortage starting in 2007, and the imbalance will grow every year to cripple the economy by 2025, when shortage will be 11,092 MMCFD (Million standard cubic feet per day) against total 13,259 MMCFD production. The Hagler Bailly report added that Pakistan's gas shortage would get much worse in the next two decades if it did not manage any alternative sources. It appears that we are seeing the beginning of the crisis that HB predicted back in 2006.

Recent Growth in Gas Demand:
Demand for natural gas in Pakistan increased by almost 10 percent annually from 2000-01 to 2007-08, reaching around 3,200m cubic feet per day (MMCFD) last year, against the total production of 3,774 MMCFD, according to Pakistani official sources. But, during 2008-2009, the demand for natural gas exceeded the available supply, with production of 4,528 MMCFD gas against demand for 4,731 MMCFD, indicating a shortfall of 203 MMCFD. This winter, Sui Northern Gas sources have reportedly told the media that the company is dealing with a shortfall of 700 MMCFD of gas due to increasing use of heaters and geysers.

Energy Shortages:

The potentially devastating effect of the gas shortage on the nation can be gauged by the fact that Pakistanis heavily depend on gas for their energy needs, much more so than neighboring Indians. With a gas pipeline network stretching around 56,400 km, pipeline density of 1044 km/mmscmd (million metric standard cubic meter per day) and a 31,000 km distribution network to serve its domestic and commercial consumers and nearly 3000 CNG stations, the gas consumption in Pakistan is much higher than its bigger South Asian neighbor. India relies more heavily on its vast coal reserves for energy.

According to BMI, gas is the dominant fuel, accounting for 47.5% of Pakistan's primary energy demand (PED) in 2007, followed by oil at 30.7%, hydro-electric energy at 12.9% and coal with a 7.9% share. Regional energy demand is forecast to reach 4,859 million tonnes of oil equivalent (toe) by 2013, representing 24.9% growth from the estimated 2008 level. Pakistan’s estimated 2008 market share of 1.52% is set to ease to 1.45% by 2013. The country’s estimated 2.5TWh of nuclear demand in 2008 is forecast to reach 5.0TWh by2013, with its share of the Asia Pacific nuclear market rising from 0.49% to 0.75% over the period.

In terms of overall energy requirements, here is a more complete picture for per capita energy consumption in South Asia and China, using Nationmaster, with 2006-2007 figures and rankings:

India oil consumption per day per 1000 people 2.4 barrels (ranked 165)
Pakistan oil consumption per day per 1000 people 2.2 barrels (ranked 169)
China oil consumption per day per 1000 people 5.7 barrels (ranked 144)

There is strong correlation between energy availability and level of any nation's development. The nations topping the list of human development rankings are also the largest per capita consumers of energy.
Only 54% of Pakistanis have access to electricity. Per capita energy consumption in Pakistan is estimated at 14.2 million Btu, which is much higher than Bangladesh's 5 million BTUs per capita but slightly less than India's 15.9 million BTU per capita energy consumption. South Asia's per capita energy consumption is only a fraction of other industrializing economies in Asia region such as China (56.2 million BTU), Thailand (58 million BTU) and Malaysia (104 million BTU), according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.

Energy Projects:

Pakistan and Germany have initiated serious discussions of German funding of eight ongoing and new hydropower projects worth billions of dollars. These talks have takien place in Islamabad between German Minister for Economic Co-operation and Development Ms. Heidemaire Wiegoreak Zeul and Pakistani Prime Minister's Adviser on Finance Mr. Shaukat Tarin, according Business Recorder newspaper.

In addition to megaprojects such as 1000 MW Neelum-Jhelum hydropower project, a number of community-based micro hydro projects are being executed with the help of the Agha Khan Foundation in Pakistan's Northern Areas and NWFP. Within this region, out of a total of 137 micro-hydro plants, the AKRSP has established 28 micro-hydros with an installed capacity of 619kW. Initially, in 1986, these plants started as research and demonstration units. These projects were extended to Village Organizations (VOs) and became participatory projects. A Village Organization (VO) is a body of villagers who have organized themselves around a common interest.

Pakistan has vast reserves of coal. But there is very little energy produced by burning coal. China has now agreed to invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tons of coal per year, which is sufficient to fuel the proposed 405 MW power plant. Pakistan is currently world's seventh largest coal-producing country, with coal reserves of more than 185 billion tons, ranking as the fourth of fifth largest coal reserves in the world. Almost all (99 percent) of Pakistan's coal reserves are found in the province of Sindh. Pakistan's largest coal field is Thar coal field which is spread over an area of 9100 square kilometers, and contains 175 billion tons of coal. So far this coal field has not been developed but efforts are underway.

In addition to the coal project, China has agreed to build several other power plants in Pakistan to help the South Asian nation deal with its worsening electricity crisis. When completed over the next several years, these plants, including Nandipur (425 MW, Thermal), Guddu(800 MW, Thermal) and Neelam-Jhelum(1000 MW, Hydro), Chashma (1200 MW, Nuclear) will add more than 3000 MW of power generating capacity for the energy-hungry country. Pakistan is currently facing a deficit of 4,000 to 5,000 megawatts, resulting in extensive load-shedding (rolling blackouts) of several hours a day.

China has already installed a 325-megawatt nuclear power plant (C1) at Chashma and is currently working on another (C2) of the same capacity that is expected to be online by 2010. The agreements for C3 and C4 have also been signed. The United States has objected to China supplying C3 and C4 on the grounds that any Pak-China nuclear cooperation would require consensus approval by the NSG, of which China is now a member, for any exception to the guidelines. The US is applying double standards since it supported and got approval for such an exception from NSG for its own nuclear deal with India.

Beyond the power generation capacity expansion projects, Pakistan must also pay attention to modernizing its national grid. The country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, partly due to theft, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.

In terms of the cost of renewable sources such as wind and solar, the cost of not empowering the poor rural communities is far greater than the cost of providing a Grameen Shakti type solar system, or Agha Khan Foundation's microhydro or the gearless wind microturbines that are beginning to show up on the rural landscape in Pakistan.

Given the unresponsive nature of "democracies" and incompetent and corrupt governance in India and Pakistan, many of the poor rural communities far away from the national grid will probably never be electrified unless there are community-based local green initiatives pursued with the help of NGOs.

Compressed Natural Gas (CNG) Industry Growth:

According to International Association of Natural Gas Vehicles, as of December 2008, Pakistan has the world’s highest number of vehicles running on compressed Natural Gas (CNG). The number is 2 million. Pakistan also has the World’s largest number of CNG refueling stations, 2941 as of July 29, 2009.

Just as the worst electricity crisis of its history is currently gripping the nation, it appears that the gas crisis has begun to rear it ugly head, with recurring reports of low gas pressure, CNG station closures and rationing, and gas "load shedding" for businesses and consumers. The blame game has already started and there appears to be little relief in sight on either the electricity or the gas fronts. One of the reported effects of the gas shortage is delay in the availability of power from the rental power plants which are expected to operate on gas. It appears that the attempt to solve the electricity crisis has made life even more difficult for the people by spawning a gas crisis at the same time.

Citizens and industries in Lahore have been particularly badly hit, resulting in angry protests widely reported in the media. The All Pakistan Textile Mills Association (APTMA), the textile industry group, has claimed that it suffered losses of about Rs 1 billion in December due to lack of smooth gas supply to the industry. Pakistan's CNG industry is also feeling the pinch after rapid growth in the last few years.

Rental Power Plants (RPPs):
A story in Pakistani newspaper the News is alleging that "these expensive rental power plants, which were being installed with tall claims to address the energy crises in the country, were said to have now become one of the major reasons behind a new sorts of energy crises in Pakistan, as their gas requirements are bound to hit other sectors of economy running on gas supplies".

Solutions For Gas Shortage:

The best solution to alleviate the gas shortage is to build a pipeline to import over a billion cubic feet of gas a day from Iran, but such a project will take many years to implement even on an accelerated schedule. In the meantime, Pakistan's Sui Southern Gas Company (SSGC) is working on completing a project, dubbed Mashal LNG Project, that was started three years ago to import 500 MMCFD of LNG from Qatar by 2010. But even that won't happen till October 2011. The second phase of this project will add an additional 500 MMCFD of LNG by 2013.

In response to the alarming gas situation, there are reports that Pakistan is finally going ahead with the multi-billion dollar Iran-Pakistan Gas Pipe Line Project and has initiated the process of arranging financing of US $1.245 needed for laying 800 Km long pipe line from Pakistan-Iran border to Nawab Shah. Pakistan will also import 1.05 billion cubic feet of gas per day from Iran at 78 percent of crude oil parity price. Pakistan and Iran have already signed Gas Sales Agreement (GSPA) for importing 750 million cubic feet gas per day which will be used to generate 4500 MW of electricity and would be a cheaper alternative to the presently expensive imported furnace oil used in the existing thermal power houses. Another 250 million cubic feet of Gas per day is also envisaged to the purchased for development projects at Gawadar in Balochistan. Considering the magnitude and strategic nature of the Gas Line Project, the government has adopted a private-public partnership approach for financing the project with debt equity ratio of 70:30 under which the Pakistan government will provide 51 per cent equity. This equity financing would be provided upfront through selected Public Sector Entities like OGDCL, Pakistan Petroleum Limited , Government Holding Private Limited, Employees Old Age Benefits Institution and State Life Insurance Corporation. The debt will be sourced from the market backed by the government guarantees for transportation tariff. Any gap in raising the required debt from the market, the funds will be available by PDSP allocations.

The current completion date for Iran-Pakistan gas pipeline project is June, 2014, if things go smoothly. There is significant investor interest. Russia's Gazprom is very keen on the project. "We are ready to join the project as soon as we receive an offer," Russia's deputy energy minister Anatoly Yankovsky has been quoted as saying by the media. Another top Russian government official has said Moscow sees the pipeline as a means to divert Iranian gas from competing with Russian exports on the European market.

Iranian Consul General in Pakistan, Masoud Mohammad Zamani has told Pakistani news site the Dawn that Iran has completed major portion of work on Iran-Pakistan gas pipeline project and within couple of months the pipeline will be at Iran-Pakistan border. Hopefully, by 2013 Iran gas will be used in Pakistan, Iranian envoy explained during a meeting with members of Karachi Chamber of Commerce and Industry.

India, too, needs to import gas to meet its growing energy needs. But it pulled out of the pipeline project after the US-India nuclear deal. If and when India does come back to the table, the pipeline built from Iran to Nawabshah in Pakistan can be extended to support additional capacity for India.

Current Issues:

As the nation's attention turns to the gravity of the worsening gas energy crisis, the growing supply-demand gap for electricity is still unaddressed. The government's attempts to fill the gap with rental power have raised many questions and drawn serious corruption charges from the opposition parties and the media. Analysts at Center for Research and Security Studies are asking why have some private power producers completely shut down? And why are other private power producers operating well below their full capacity? It is being alleged that the reasons for buying rental power to fill the electricity gap rather than pay the outstanding dues of the independent power producers (IPPs) to fully utilize exiting installed capacity have to do with the kickbacks offered by the rental power operators. According to Reuters, Finance Minister Shaukat Tarin almost resigned after failing to persuade the cabinet against renting, an option he considered expensive and inefficient.

There have been widespread complaints in Islamabad, including by Mr. Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators, such as those supplying rental power, while the IPPs are not being paid for supplying power from currently underutilized installed capacity. Requests for information by Transparency International Pakistan regarding rental power contracts have been ignored by the Ministry of Water and Power. There are widespread corruption allegations against President Asif Ali Zardari personally who has allegedly influenced the award of the 783 MW rental power contracts to a former governor of Oklahoma and his Pakistani partner.

Rental power is not an issue by itself. While it does provide some relief, it does not address the core problem of making sure that government departments, politicians, businesses and all consumers pay for power they use to make it attractive for private investments in the power sector.

Currently, most IPPs in Pakistan are operating well below capacity because they are not being paid billions of rupees owed to them. Paying them should be the first step toward filling the supply-demand gap by fully utilizing current capacity, and restoring order in the power market. Unless this done, the electricity rates will keep rising because the honest consumers end up footing the power bill for the many deadbeats and power thieves.

Meeting Energy Demand Growth:BMI forecasts Pakistan real GDP growth averaging 3.98% a year between 2009 and 2013, with the 2009 estimate at 2.50%. The population is expected to expand from 161mn to 177mn, with per capita GDP and electricity consumption increasing by 20% and 11% respectively. Power consumption is expected to increase from an estimated 81TWh in 2008 to 99TWh by the end of the forecast period, which provides are relatively stable theoretical generation surplus (before transmission losses, etc.), assuming 4.3% annual growth in electricity generation.

Between 2008 and 2018, BMI is forecasting an increase in Pakistani electricity generation of 59.2%,which is mid-range for the Asia Pacific region. This equates to 27.2% in the 2013-2018 period, up from25.1% in 2008-2013. PED growth is set to increase from 19.1% in 2008-2013 to 25.8%, representing 49.9% for the entire forecast period. An increase of 49% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise by 52% between 2008 and2018, with nuclear usage up 380% from a low base.

Summary:

The failures of successive Pakistani governments in tackling the growing energy crisis are shameful. Inaction at this point would be criminal. The Iran-Pakistan gas pipeline project has to be accelerated to avoid significant further harm to the country. At the same time, the shortages of electricity and gas need to be managed actively and fairly to minimize the impact on the consumers and the businesses to help the economy recover from the current slump. The issue of unpaid electricity bills and the rampant power theft should be confronted head-on to restore investor confidence in long-term energy projects in the country. Since the federal government is the biggest dead beat, followed by the four provincial governments, FATA, the KESC and the KW&SB, it is an opportunity for the current leadership in Islamabad to lead by example by paying off their outstanding utility bills, and resolving the circular debt issue in energy sector expeditiously.

Here is a recent video clip of former President Muharraf talking about the power crisis in Pakistan:

209 comments:

Few days back ,I attended an International conference on Science and Technology.In one of the sessions Dr Samar Mubarak Mand(Former Nuclear Scientist)was the speaker.He is now Member Science and Technology with Planning commission.He described about Trillions of tons of coal reserves in Thar and about setting up of a 1000 MW coal fired power plant,where coal would be used in situ.I do not remember much of his speech ,but got the impression that it just might solve all our Electric and Gas problems

Najam: "Trillions of tons of coal reserves in Thar and about setting up of a 1000 MW coal fired power plant,where coal would be used in situ."

Yes, various reports indicate that Pakistan has vast reserves of coal. But there is very little energy produced by burning coal. China has now agreed to invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tons of coal per year, which is sufficient to fuel the proposed 405 MW power plant. Pakistan is currently world's seventh largest coal-producing country, with coal reserves of more than 185 billion tons (second in the world after U.S.A.'s 247 billion tons). Almost all (99 percent) of Pakistan's coal reserves are found in the province of Sindh. Pakistan's largest coal field is Thar coal field which is spread over an area of 9100 square kilometers, and contains 175 billion tons of coal. So far this coal field has not been developed but efforts are underway.

During 2008-2009, the demand for natural gas exceeded the available supply, with production of 4,528 MMCFD gas against demand for 4,731 MMCFD, indicating a shortfall of 203 MMCFD. This winter, Sui Northern Gas sources have reportedly told the media that the company is dealing with a shortfall of 700 MMCFD of gas due to increasing use of heaters and geysers.

I agree that the best solution to alleviate the gas shortage is to build a pipeline to import over a billion cubic feet of gas a day from Iran, but such a project will take many years to implement even on an accelerated schedule. In the meantime, Pakistan's Sui Southern Gas Company (SSGC) is working on completing a project, dubbed Mashal LNG Project, that was started three years ago to import 500 MMCFD of LNG from Qatar by 2010. But even that won't happen till October 2011. The second phase of this project will add an additional 500 MMCFD of LNG by 2013.

Pakistan is finally going ahead with the multi-billion dollar Iran-Pakistan Gas Pipe Line Project and has initiated the process of arranging financing of US $1.245 needed for laying 800 Km long pipe line from Pakistan-Iran border to Nawab Shah. Pakistan will also import 1.05 billion cubic feet of gas per day from Iran at 78 percent of crude oil parity price. Pakistan and Iran have already signed Gas Sales Agreement (GSPA) for importing 750 million cubic feet gas per day which will be used to generate 4500 MW of electricity and would be a cheaper alternative to the presently expensive imported furnace oil used in the existing thermal power houses. Another 250 million cubic feet of Gas per day is also envisaged to the purchased for development projects at Gawadar in Balochistan. Considering the magnitude and strategic nature of the Gas Line Project, the government has adopted a private-public partnership approach for financing the project with debt equity ratio of 70:30 under which the Pakistan government will provide 51 per cent equity. This equity financing would be provided upfront through selected Public Sector Entities like OGDCL, Pakistan Petroleum Limited , Government Holding Private Limited, Employees Old Age Benefits Institution and State Life Insurance Corporation. The debt will be sourced from the market backed by the government guarantees for transportation tariff. Any gap in raising the required debt from the market, the funds will be available by PDSP allocations.

Unfortunately, there is a long history of opacity and graft in the award of power contracts in Pakistan.

In the mid-1990s, BB awarded did the Hubco deal and other IPP contracts, which were later revoked by NS on corruption charges against Zardari, and NS demanded renegotiation that itself brought new charges of graft against Nawaz Sharif. It also soured the investors' interest in power sector.

And now, some of the same IPPS who invested in Pakistan are all running well below capacity, while Zardari is awarding rental power contracts to some of his "friends" such as the former governor of Oklahoma who was himself indicted by the US on corruption charges.

"The former governor of Oklahoma (USA), David Walters, is indeed an extremely resourceful man. As reported by Michael D Bates in the Urban Tulsa Weekly (Sept 3, 2008), “Political observers thought David Walters’ political career was finished when he departed Oklahoma’s Governor’s Mansion in 1995 after a single term and an indictment on eight felony counts.

“Accusations that Walters had promised state jobs in exchange for campaign contributions began early in his term as governor. In October 1993, Walters was indicted by a multi-county grand jury on six felony perjury counts, two felony conspiracy counts, and a misdemeanour count of accepting an excessive campaign contribution. Prosecutors dropped the felony charges in exchange for a guilty plea on the misdemeanour”.

The man who received an indictment in his own country however received riding tips in 1995, from none other than Mr Asif Ali Zardari. And now, almost fourteen years later, the gentleman has bagged extremely lucrative contracts for providing 783 MW of rental power.

Besides enjoying the obvious blessings of the top officials of the country, Mr Walters has none other than the energy czar of Pakistan, I Z Ahmed as his business partner. Mr Ahmed it may be recalled was also touted as being extremely close to the former president, Pervez Musharraf.

Mr Walters confirmed to The News from USA, in writing, that President Asif Zardari was known to him since 1995 when he (AZ) had taken him for a horse ride. “I had the privilege of meeting President Zardari in Islamabad on my last visit to Islamabad last month and reminded him that the last time we had met was when he had invited me and my colleague to join him for horseback riding in 1995. Mr David also recalled that seeing me struggle with the horse, Mr Zardari had said: “I take it riding is not your passion.”

Here's a Wall Street Journal report about India trying to reduce dependence on China in power sector:

MUNDRA, India—India is trying to rein in its heavy reliance on Chinese equipment and know-how for the ambitious expansion of its power sector. The shift casts a shadow over what has been a healthy partnership in an often tense relationship between the giant neighbors.

India wants to boost electricity output by 60% in the five-year span ending March 2012 to alleviate severe shortages and help fuel a rapidly growing economy. But it doesn't have enough of its own equipment and engineers to meet that goal, so power companies have looked overseas for help. U.S. and European suppliers are too expensive, but low-cost Chinese contractors are a good fit.

Chinese companies are now supplying equipment for about 25% of the new power capacity India is adding to its grid, up from almost nothing a few years ago. They have sent thousands of skilled workers to Indian plant sites, some of which boast Chinese chefs, Chinese television and ping pong.

But now India is reining in cooperation with China as it seeks to build up its own manufacturing base to service power plants. The Central Electricity Authority, India's top planning body for power projects, recently asked government-controlled power companies to use Indian equipment on all upcoming big projects.

The Indian government is also considering a plan to tax Chinese power imports. And Prime Minister Manmohan Singh's aides have told power regulators to make sure India has enough spare parts on hand to fix Chinese equipment when it needs repairs, according to a person familiar with the discussions.

"It's better that we depend on our own capabilities rather than depend on those from the outside," Rakesh Nath, chairman of the Central Electricity Authority, said in an interview.

"India wants to boost electricity output by 60% in the five-year span ending March 2012 to alleviate severe shortages and help fuel a rapidly growing economy. But it doesn't have enough of its own equipment and engineers to meet that goal, so power companies have looked overseas for help. U.S. and European suppliers are too expensive, but low-cost Chinese contractors are a good fit.

Chinese companies are now supplying equipment for about 25% of the new power capacity India is adding to its grid, up from almost nothing a few years ago. They have sent thousands of skilled workers to Indian plant sites, some of which boast Chinese chefs, Chinese television and ping pong."

Even as he leaves his post, Shaukat Tarin is sill trying to reduce the energy sector circular debt problem, according to the News:

KARACHI: The government has decided to issue Rs. 25 billion under circular debt head next week, Finance Secretary Salman Siddique said.

Talking to Geo News after meeting chaired by outgoing Finance Minister Shaukat Tarin, he said of the pledged amount, the Finance Ministry will issue Rs13 billion and the remaining amount would be provided by various other departments and the provincial governments.

According to sources, the National Adjustor has hammered out a plan for adjustment of various departments and the provincial governments; however, it is now not clear that the amount would be adjusted in books or paid in cash.

Talking Geo News, Raja Pervez Ashraf said the government inherited the issue of circular debt, claiming the circular debt would be whittled away in March.

Pakistan has one of the highest "transmission losses", a euphemism for rampant power theft by consumers. Now Nawaz Sharif, former prime minister and PML(N) chief, is being accused of addressing a supporter's rally lit by "kunda", a hook-like device commonly used to steal electricity.

LAHORE: Pakistan Muslim League-Nawaz found itself entangled in a controversy on Monday that threatened to undermine its claim of occupying the high moral ground, according to a report by DawnNews.

As Nawaz Sharif addressed supporters in the run-up to a Lahore by-election, his large rally was lit up by extensive use of illegal connections using ‘kunda’ (hooks that are attached to live power cables to secure supply without having to pay for it).

Power utility officials told DawnNews that they would estimate the number of units consumed and bill the user based on that, while Punjab Law Minister Rana Sanaullah tried to distance his party and government from this outrage by blaming an unnamed contractor.

PML-N spokesman Siddiqul Farooq told DawnNews that an inquiry would be held to fix responsibility for what was “clearly” a crime.

In a damage-limitation exercise well past midnight, PML-N leader Saad Rafique told a news conference his party was not at fault and that ‘kunda’ connections had been made by the administration to provide security lighting.

General Electric (GE) has signed an MOU with Pak govt to participate in supporting the forecast 54,0000 MW of electricity demand by 2020. Here's the report from Daily Times:

ISLAMABAD: The government has signed a Memorandum of Understanding (MoU) with General Electric (GE) in the Prime Minister House to help promote the modernisation of Pakistan’s infrastructure and economy.Saleem H. Mandviwala, Chairman Board of Investment and Nani Beccalli-Falco, President and Chief Executive Officer of GE International singed the MOU on behalf of the government of Pakistan and General Electric Company respectively.The prime minister welcomed the initiatives of General Electric to support Pakistan’s national objective for development. He expressed the democratic government’s commitment of making Pakistan a trade, investment and financial hub.“This is a landmark day that we have signed the MoU with one of the most renowned conglomerates of the USA, and this will certainly open another productive era of economic ties and people to people contacts,” the Prime Minister said.The agreement focuses on the development of Pakistan’s energy resources to meet projected demand of 54,000 megawatts by the year 2020. “General Electric is helping build the energy, water, transportation and technology infrastructure of the new century,” says Nani Beccalli-Falco, President and Chief Executive Officer of GE International. “There are huge synergies between the products and services GE businesses provide in energy and infrastructure and the needs and goals of Pakistan to modernize its economy with cleaner, more efficient and better infrastructure technologies.” GE has similar agreements with a number of other governments, including Kazakhstan, Nigeria, Qatar and the province of Ontario, Canada.The government of Pakistan aimed to meet projected energy demands using diverse sources and tactics. Possible solutions include renewable sources, such as, wind, solar, geothermal, biomass, coal, hydro and conventional thermal through gas and steam turbines, rehabilitation of existing power generation facilities, along with transfer of technology for manufacture and repair of turbines, developing more efficient and environmentally sound rail transport systems, developing water purification and reuse, wastewater treatment, and process system programs.According to the MOU’s terms, GE would assist Pakistan in achieving its goals by engaging in Pakistan’s energy, transportation and water sectors and would work to identify potential sources of funding and explore potential investment opportunities in those sectors. Pakistan has committed to meeting with GE regularly to facilitate the goals of the MoU and provide support to the establishment and operation of the GE facilities in Pakistan, transparently and consistent with the laws and regulations of Pakistan. Pakistan would also facilitate the issuance of work permits and visas for the GE employees and contractors as needed in order to support the objectives of the signed MOU.

ISLAMABAD, Pakistan, March 15 (UPI) -- Islamabad ordered its Finance Ministry to release emergency fundsto the state energy sector to stave off an oil, gas and electricity crisis in the country.

Pakistani Prime Minister Yousuf Raza Gilani called on lawmakers to come up with ways to avoid defaulting on foreign payments against oil supplies as the country grapples with a looming energy crisis.

Islamabad was forced to consider international loans to help the energy sector, which is dragging on the embattled national economy. Pakistani Finance Minister Shaukat Tarin stepped down in February because of the economic turmoil.

Gilani in an emergency meeting called for the weekend release of emergency funding to help the energy sector pay its debts as several sectors faced imminent cut offs, Pakistan's Dawn newspaper reports.

Raja Pervaiz Ashraf, the Pakistani water and power minister, said utility companies were running short on natural gas.

Gilani called on top Cabinet officials to present plans for a gas pipeline from Iran as early as Wednesday.

Pakistan and Iran signed a 25-year deal for natural gas supplies in 2009 as part of an effort to advance plans for the so-called Peace Pipeline. The project, envisioned in the 1990s, would move natural gas from the giant South Pars gas complex in the Persian Gulf to markets in Pakistan and India.

Here's a UPI report about the implications of Iran-Pakistan gas pipeline for US policy to sanction Iran:

TEHRAN, March 19 (UPI) -- As Iran braces for another broadside of economic sanctions over its nuclear program.........----------------U.S. energy analyst Gal Luft said the pipeline could also "have profound implications for the geopolitics of energy in the 21st century and for the future of South Asia."

Iran and Pakistan signed an agreement for the construction of the 560-mile, $7.5 billion pipeline .........

The project is crucial for Pakistan's growing energy requirements. Iran will supply 750 million-1 billion cubic feet of gas per day by mid-2015.

The project was first mooted in 1994. It was intended to carry gas through Pakistan to India in a 1,724-mile pipeline. But India, under intense pressure from the United States, withdrew in 2009, citing disputes over prices and transit fees. There was also deep misgivings in New Delhi about dealing with its longtime foe Pakistan.

India has invested instead in nuclear power to meet its ever-rising demand for energy in its burgeoning economy. It signed a landmark deal with the United States in 2008 for nuclear equipment.

There has been no official explanation about why the Americans would allow Pakistan to go ahead and sign a pipeline agreement with Iran at a time when Washington is striving to isolate the Islamic Republic and paralyze its economy.

But the Americans cannot afford to antagonize Pakistan at a time when Washington needs Islamabad's support to fight al-Qaida and the Taliban. Pakistan is already suffering serious energy shortages with an electricity shortfall of 3,000 megawatts. These cause politically troublesome long and frequent blackouts.

The United States had been pressing for a pipeline to South Asia from gas-rich Turkmenistan in Central Asia via Afghanistan that would bypass Iran. But the security situation in Afghanistan made such a project unlikely.

India hasn't closed all doors to the project and may still rejoin. It is expected to require 146 billion cubic meters of gas per year by 2025 and its options are limited.

China, ever hungry for energy to fuel its mushrooming economy, has indicated that it might sign on and run an extension of the pipeline from Pakistan.

It may provide financial assistance to Islamabad for the project, which would provide an overland energy corridor less vulnerable to interference by the United States -- or others -- than the long tanker route from the Gulf across the Indian Ocean to the Pacific.

China is the main obstacle preventing the United States mustering the U.N. Security Council behind new sanctions on Iran. Sanctions would cut 10-12 percent of China's oil imports and jeopardize oil contracts worth hundreds of billions of dollars.

Iran desperately needs this project.....

But U.S.-led sanctions have prevented it from exploiting this through high-volume exports. The pipeline to Pakistan, and possibly the massive markets in India and China as well, could change all that and immunize Tehran from U.S. pressure.

The geopolitical implications of the Iran-Pakistan pipeline going through are immense. If the Americans relent, they may secure concessions from Iran and would certainly win influence in Pakistan by helping it out of a worsening energy crisis.

"By connecting itself with the world's second largest gas reserves, Pakistan would guarantee reliable ....

"If the pipeline were to be extended to India it could also be an instrument of stability in often tense Pakistan-India relations as well as a source of revenue for Islamabad through transit fees." One estimate puts that at around $600 million a year.

"I see the cost of [solar] photovoltaics going down and down. Right now it's about $4 per watt for full installation. In a decade it will certainly be less than $2. If it's $1 or $1.25, then everyone will put it up without subsidy. What else do I see? A new generation of biofuels that are direct substitutes for gasoline—so, better than ethanol—using agricultural waste: weed straw, rice straw, corncobs, wood surplus."

"We're at about 4 percent now (renewables sources). President Obama made a target to double that by 2012, and we are on target. I expect that to continue. In 10 years' time we hope to have carbon-capture-and-sequestration technologies starting to be deployed. Hopefully, we'll have restarted the nuclear industry and we'll be building several nuclear reactors."

Here's are excerpts from a report about "Solar India" initiative in Pakistan's neighborhood:

The country is blessed with radiant sunshine: it ranks at the top among the world's countries in in terms of annual solar energyyield, according to recent studies.

But it is also a country where 412 million of its 1.1 billion people live without electricity, faces an energy deficit of 16 per cent and needs power desperately to drive its high economic growth.

Aiming for long-term energy security, the government has unveiled plans to boost solar output almost 1,000-fold to 20,000 megawatt by 2022.

The 'Solar India' initiative, to be implemented by the Ministry of New and Renewable Energy, would power cities and rural areas and could revolutionize the domestic solar-energy industry.

Fossil fuels currently account for 70 per cent of India's energy mix, while renewable sources provide about 9 per cent.

'Given the ground realities, major challenges include effective financing, advancing R&D in technologies for solar modules and components and human resources like training engineers and technicians,' said Rajinder Kumar, secretary general of the Solar Energy Society of India.

'We have to bring in a balance of system, distribution and maintenance to realize our solar dream,' Kumar said.

The investmentrequired for the three-phase programme is around 50 billion dollars, of which the government would contribute about 40 per cent.

There is little clarity on where the remainder should come from, with Indian expecting that rich countries with a responsibility to assist renewable projects in the developing world would provide the funding.

The strategy currently framed would include a long-term policy to purchase power and shift subsidies from fossil fuels to renewable-power generation.

Here's a billion dollar LNG contract scandal uncovered by a complaint of the Fauji Foundation CEO, as reported by The News:

The NA members were told that the petroleum ministry bosses had never recommended to the Economic Coordination Committee (ECC) to give the multi-billion dollar contract to French firm (GDF-SUEZ), whom surprisingly they all were religiously defending now.

It was disclosed that the petroleum ministry had actually recommended the award of the contract to Shell-Qatar, whose bid was higher than the French bid by $1.5 billion. But Shaukat Tarin had thrown this recommendation of the ministry in a dustbin after he learnt that he was being asked to award the contract to a party (Shell), whose bid was higher by $1.5 billion compared to the lowest bidder.

At the end of the hour-long presentation followed by a question-answer session, Chairman MNA Sheikh Waqas Akram, praised the journalist for his comprehensive presentation. Later, MD Fauji Foundation Lt Gen Rab Nawaz was said to have reiterated his old stance that his firm’s bid was the lowest if compared with the GDF-Suez, which was awarded the deal.

Klasra told the committee that his story was based on the minutes of the ECC presided over by then Finance Minister Shaukat Tarin. The minutes had revealed that Tarin had got a telephone call from MD Fauji Foundation that the lowest bid given jointly by FF/Vitol had been rejected and the highest bidder GDF-Suez was given the lucrative contract. Tarin had informed MD FF that he was not aware of any such bidding because the petroleum ministry never shared such information in its official summary tabled before the ECC on Feb 9.

Consequently, Tarin had alarm bells ringing and had ordered a serious probe into the whole issue as to why the bid offered by FF/Vitol was not mentioned in the summary. But the petroleum ministry never replied to the queries of Tarin till he departed from his office at the end of February, much to the satisfaction of the petroleum ministry officials who thought that the issue had been buried but the publication of the scandal by The News shook them.

Petroleum ministry officials had even written a letter to Tarin, informing him that Minister Naveed Qamar had desired that they should not respond to him as he would “personally deal” with this issue. According to Klasra, he had contacted Shaukat Tarin to get his version about these startling developments and the ex-FM had confirmed on record that he was kept in the dark about the joint bid of FF/Vitol, which was claimed to be the lowest.

Tarin confirmed that he got no reply from the Ministry of Petroleum till he left the office. He also claimed that according to his calculation and information, there was a difference of one billion dollars in the bid price of the French company and FF/Vitol, so the country had suffered a loss of a billion dollar.

LAHORE: Help for Pakistan’s energy sector will be a top priority in plans for direct US investment in the country under the Kerry-Lugar Bill, Administrator of the US Agency for International Development (USAID), Dr Rajiv Shah, said here on Wednesday.

“The US will help refurbish three thermal and one hydel power plant that will add some 4,500MW to the national grid,” Mr Shah said while talking to this correspondent at Lahore airport before leaving for Islamabad. USAID’s Pakistan Mission Director Robert Wilson was also present.

Dr Shah said the US would invest directly in Pakistani institutions in a wide range of areas. “It is time to take immediate action to aggressively meet education and health needs also.”

He dispelled a perception that a large part of the funding would go to consultants and contractors in the United States. “It will be utilised in water, education, health and agriculture sectors that are in tremendous need of development through short-, medium- and long-term infrastructural reforms.”

He said the initiatives would help create employment, especially in tribal areas where small and medium projects relating to infrastructure development, livelihood support and technology transfer would be launched.

The quality of education would be improved through teachers’ training, curriculum development programmes and provision of textbooks in other less developed areas, especially southern Punjab, he said.

In health sector, he said, the focus would be on strengthening professional institutions and USAID would arrange for capacity building of lady health workers and paramedical staff and higher education of physicians.

Dr Shah said reinvestment in agricultural research would be another major area of attention. “We are proud to be partners in research activities at the agriculture universities of Faisalabad and Rawalpindi. Now plans are afoot to improve training facilities and marketing skills of farmers as agriculture contributes more than 25 per cent to Pakistan’s Gross Domestic Product.

“We will work on the critical issue of water with programmes aimed at helping Pakistan better manage its water resources to ensure maximum water access to the people.”

Dr Shah said: “President Obama and Secretary of State Clinton launched strategic dialogue with Pakistan to make sure that our relationship is a broad and deep partnership defined by mutual respect and cooperation in a broad range of areas, especially energy, water, education and health sectors that are very important for development of cooperation.

“This trip was really an effort to follow up that strategic dialogue. We are here to meet Pakistani leaders in government, private sector and civil society. We also have a chance to meet professors at universities and hold discussions to explore effective means and ways to work together.”

Iftikhar A. Khan adds from Islamabad: Addressing a press conference in the federal capital, Dr Shah said aid to Pakistan was not tied to the country’s performance in stemming militancy. He underlined the need for financial management control to ensure that the aid was spent to achieve the defined objectives.

He said the US had significantly enhanced investment portfolio for Pakistan without setting any specific conditions.

He said the purpose of his visit was to learn about priorities in development and put in place many principles discussed during the recent round of strategic dialogue in Washington.

Dr Shah hinted at the possibility of helping Pakistan augment its water reservoirs. “We are looking at a broad range of options and will do everything which makes economic sense.” He said the US was working with other donors and international partners to help Pakistan improve its hydro infrastructure.

Mr Gilani said that Pakistan's government would pay 116 bn rupees ($1.38bn) to the power sector to help resolve the issue of debt owed to various power producers within the industry.

Measures include extending the official weekend from one to two days, early closure of street markets, and a 50% cut in power to government offices.

Pakistan's energy crisis is due to a surge in demand and a failing power distribution infrastructure.

The shortages have crippled industry and led to rioting across Pakistan.

Electricity supplies to homes and businesses across Pakistan are often cut for several hours a day because of the power shortfall.

Extending the weekend will shorten the working week and so cut electricity use by businesses.

Mr Gilani says the government will take the lead in cutting demand for energy.

"We are taking these decisions in the best national interest," he told reporters.

Other energy-saving measures include:

* The power supply to Karachi, Pakistan's main port and industrial capital, will be reduced by 300 MW a day * Marriage halls will no longer be able to host all-night wedding parties * Neon signs and brightly-lit billboards are to be banned

All the measures will be reviewed at the end of July.

Mr Gilani said he would introduce government units and 13 independent power producers as part of the plan.

He said the steps were necessary and that the government now had a long-term strategy to deal with the power crisis.

The BBC's Syed Shoaib Hasan in Islamabad says that the energy crisis is also seen as a threat to Pakistan's security situation.

Pakistan's leadership has been examining alternatives to its hydroelectric power-based energy producing sector.

One option they are looking at is more civilian nuclear power plants, our correspondent says.

Pakistan is in the throes of an energy crisis, with Pakistanis now enduring about 12 hours of power cuts a day, a grueling schedule that is melting ice, stopping fans and enraging an already exhausted populace just as the blast furnace of summer gets started.

In an effort to stem that frustration, Pakistan’s government held an emergency meeting last week, bringing together top bureaucrats from across the country. But instead of easing the problem, it aggravated it, ordering power-saving measures that seemed calculated to smother some Pakistanis’ last remaining pleasures.

“They are playing a joke on us,” said Amina Ali, the mother of a bride at a wedding hall that was under orders to close early as part of the new energy-saving restrictions. Her brother chimed in: “The Pakistani people are a toy in the hands of the government.”

The power failures could prove destabilizing if they go unchecked, analysts said. Pakistan badly needs its economy to expand to make space for its bulging young population, and chronic power cuts work against that.

It is a concern for the United States, which is trying to help steady Pakistan’s wobbly finances and keep its democratically elected government afloat. The Obama administration has pledged about $1 billion for energy over the next five years.

The crisis is a snarl of unmet responsibilities, and untangling it will not be easy. It has a cast of guilty characters that goes back years: governments that are incapable of planning ahead; bureaucrats who take bribes; even ordinary people who steal about 30 percent of all the power produced. The tribal areas in the west, for example, have no meters and have never paid for power.

The result is about $2 billion a year in energy that is generated but not paid for. Industry experts said they were skeptical the government had a way to close the growing gap between Pakistan’s demand for power and the energy sector’s ability to produce it.

“There is nobody in Islamabad who is working on a coherent, integrated plan,” said one industry executive who asked not to be identified because he did not want to be seen as being critical of the government. “The discussion just keeps going in circles.”

Here are excerpts from a Washington Post report about China-Pakistan nuclear deal:

"President Obama has strongly advocated for restrictions on the spread of nuclear technology. But his administration has said little publicly about the China-Pakistan deal. Meanwhile, the administration announced Tuesday that China, despite its misgivings, had signed on to a draft U.N. Security Council resolution sanctioning Iran."

"A senior administration official, speaking on the condition of anonymity to talk more freely, said the United States is waiting for China to detail how it plans to proceed with this transaction. "We don't have much clarity, and so the issue has not ripened in the government," he said. He said any claim that the reactors are grandfathered "would be a hard case to make," but China could seek a formal exemption from the guidelines -- which are voluntary in any case.

Indeed, complicating matters is that the United States, after hard lobbying, in 2008 won a specific exemption at the NSG for trade with India, Pakistan's nuclear-armed rival. Pakistan has long wanted its own exemption -- and the United States has refused -- but the administration may not want to roil relations with Islamabad at a time when their partnership on counterterrorism is seen as crucial."

"Daryl G. Kimball, executive director of the Arms Control Association, said the China-Pakistan deal "is some of the fallout of the India-U.S. civil nuclear agreement" -- which included the special exemption for nuclear trade. The deal was a Bush administration initiative -- but was avidly supported by then-Sens. Barack Obama, Joseph R. Biden Jr. and Hillary Rodham Clinton."

Baluchistan, Pakistan’s biggest province, rarely gets much attention from the international media, and what little it does is dwarfed by that showered on Afghanistan. So it is with a certain amount of deliberate provocation that I ask the question posed in the headline: Is Baluchistan more strategically significant than Afghanistan?

Before everyone answers with a resounding “no”, do pause to consider that China – renowned for its long-term planning – has invested heavily in Baluchistan, including building a deep water port at Gwadar on the Arabian Sea to give it access to Gulf oil supplies. The region is rich in gas and minerals; attracting strong international interest in spite of a low-level insurgency by Baluch separatists.

Bordering both Iran and Afghanistan, it lies along the sectarian and geopolitical faultlines that have fissured the region since the 1979 Islamic Revolution in Iran and Soviet invasion of Afghanistan later that year. Its capital, Quetta, is often cited by Washington as a haven for the Afghan Taliban in the so-called Quetta shura, who operate independently of the more secular Baluch separatists.

The province is also a source of friction with India, with Pakistan accusing it of using its presence in Afghanistan to fund the Baluch separatists, a charge Delhi denies. Whatever the rights and wrongs of that argument, you can be fairly sure that anywhere lying on the intersection of Indian, Chinese and Pakistani interests will be strategically far more important than it might appear on the surface.

In that context, Forbes Magazine has a must-read take-out on China’s drive to develop its presence in Baluchistan.

“In the Pakistani province of Balochistan, South Asia and central Asia bleed into the Middle East. Bordered by Afghanistan, Iran and the Persian Gulf, and well endowed with oil, gas, copper, gold and coal reserves, Balochistan is a rich prize that should have foreign investors battering at the gates,” it says. “But for a half-century it has been the exclusive playground of the Pakistani government and its state-owned Chinese partners. China would prefer it to stay that way.”

For an entirely different view, Informed Comment has a guest contribution up by Berkeley academic Kiren Aziz Chaudhry. The arguments can be a bit distracting if you don’t buy into conspiracy theories about the reasons for the U.S. presence in Afghanistan. But do persevere until you get to the point where the writer identifies Baluchistan as the main centre of interest for the many rivalries across Afghanistan and Pakistan: “The fulcrum is the province of Balochistan. And within Balochistan, the pivot is the dusty, obscure coastal town of Gwadar. Gwadar has a spanking new deep water port. Wheels within wheels. Devices within devices.” It’s worth reading through to the end, if nothing else but because this little known part of the world deserves as many different voices as possible.

At the very least, both articles should leave you with a doubt in your mind about the original question as to whether Baluchistan is strategically more important than Afghanistan.

And then revisit another question I asked a year ago. Who will win the peace in Afghanistan?

Here's the news of Faisal Saleh Hayat asking the Supreme Court to review irregularities in the award of rental power plants:

ISLAMABAD: Justice Khalilur Rehman Ramday, a member of the Supreme Court bench hearing allegations of corruption in rental power plants (RPPs) projects, said on Wednesday he wondered why Pakistan was getting a mere 150MW of electricity despite having paid a whopping amount of Rs18 billion as a mobilisation fund to power generators one and a half years ago.

Taking a suo motu notice of the allegations, the three-judge bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Ghulam Rabbani and Justice Ramday ordered the IT in-charge of Pakistan Electric Power Company (Pepco) to retrieve information about the company’s generation capacity of the past one year, along with details of shortfall.

According to former minister Faisal Saleh Hayat of the PML-Q, the information had been removed by Pepco from its website.

“The statement seems to be true as our own responsible officer from the IT department confirms it,” the chief justice said, adding: “Prima facie we are of the opinion that Pepco for reasons known to its authority has removed the figures whose retrieval is very important for a decision by this court.”

The chief justice observed: “After such a big investment, prima facie the desired results have not been achieved.” He said that not any other forum, but an Asian Development Bank report itself had said so.

Last year the federal government had approved plans to set up rental power projects to generate about 1,206MW of electricity to end loadshedding.

But the plans became controversial when Faisal Saleh Hayat, a member of the National Assembly, levelled corruption allegations against Water and Power Minister Raja Pervez Ashraf in the house. Mr Ashraf rubbished the allegations and threatened to sue Mr Hayat.

The court asked Pepco’s IT in-charge to appear in person and submit the company’s authentic record.

He is required to retrieve the information from ‘master server’ if it is not available at the website.

Mr Hayat, who was summoned by the court to substantiate the allegations, described the RPP deal as the mother of all corruption and said the units being installed were 10 years old and had outlived their utility.

“They (plants) are not only very expensive, but their generation capacity has also deteriorated over the years,” he said.

Citing the official record he had downloaded from Pepco’s website, Mr Hayat said that Pakistan’s power generation capacity was about 19,478MW in 2008 while the total electricity demand was 18,200MW in 2009. About 3,068MW had been purchased from independent power producers (IPPs) which, he said, was half the capacity of 6,098MW generated through thermal plants.

Despite adequate generation capacity, Mr Hayat alleged, the much-needed power requirement was deliberately not met to justify installation of rental power houses and callously leave the poor masses to bear 14 to 18 hours of loadshedding. Besides, he said, managing directors had been appointed in Pepco in violation of the company rules because they were neither engineers nor finance specialists, or from business or accounts.

“The power generated by IPPs cost us 10 to 12 US cents per unit while the same from RPPs will cost us 15 to 22 cents,” Mr Hayat said.

But Khawaja Tariq Raheem, the counsel for Pepco, said the electricity from RPPs would cost the country Rs14 per unit while the same from thermal power (IPPs) cost Rs12 to 18. The electricity from hydel projects cost Rs2-2.5.

Here's a piece on plans for wind turbine domestic manufacturing in Pakistan published in Dawn:

PROPOSALS for local manufacturing of wind turbines and allied equipment on commercial basis from foreign and domestic companies for partnership with Pakistan Machine Tool Factory (PMTF) at Karachi are in advanced stage of evaluation. The initiative has been launched by the State Engineering Corporation.

In July 2009, the expressions of interest (EOIs) were invited by the Corporation internationally. World reputed manufacturers in the USA, China and the European countries were also contacted directly seeking their collaboration for progressive manufacturing of wind turbines.

Enormous potential for power generation from wind energy has been identified in various parts of the country.. In 2006, the Alternate Energy Development Board (AEDB) had announced an attractive investment policy for promotion of renewable energy and many manufacturers of wind turbines like GE Energy (Canada), Vestas (Denmark) and Siemens/Fuhrlander (Germany) had shown interest in setting up wind farm projects in partnership with domestic entrepreneurs.

This is not for the first time that efforts have been made for manufacturing of machinery for wind mills. In response to the Energy Policy 1994, two wind power projects were proposed to be established in Sindh and Balochistan. The American sponsors of Kenetech wind power project of 100 mw capacity, who are also the manufacturers of wind turbines, had collaborated with the PMTF for local manufacturing of wind turbines, under technology transfer arrangement. No physical progress was achieved as none of the projects was approved by the government, courtesy the powerful lobby of oil-based thermal power plants.

Again, in 2006, Heavy Mechanical Complex (HMC) planned to diversify its wide-range production programme of power plant machinery to cover wind energy projects as well. The pioneering efforts by HMC to obtain requisite technology for one or two megawatt capacity wind turbine from any global key player however, were thwarted by the AEDB, which instead supported private sector participation for local manufacturing. The AEDB had claimed to have signed agreements with a few Western companies for the design, engineering and manufacturing of wind turbines and accessories. Based on these agreements the AEDB was said to be looking for qualified companies to commence assembly-cum-manufacturing of equipment locally. Nothing happened.

In the recent past, New Park Energy Limited proposed to establish a wind turbine generator assembly plant at Nooriabad, Dadu. The sponsor has obtained approval for the development of a wind farm of 1,000 mw in phases, the first phase project being of 400 mw capacity.

The government has allocated 1,000 acres of land to the company in the Gharo-Keti Bunder wind corridor on concessionary rates. The first wind energy project was thus launched in December 2004, but only of 45 mw capacity, proposed to be installed with 30x1.5 mw General Electric (GE) wind turbines. The project, which was to attain commercial operations in 2007, still remains on paper and even the Letter of Support (LOS) has not yet been obtained by the sponsors, despite a lapse of five years......

If the indigenisation programme is successfully implemented it would prove to be precursor for rapid development of the wind power projects for its low cost, high reliability and for being environmental friendly. India has over 10,833 mw installed wind power capacity, as in September 2009, with majority of wind turbines produced locally. Today, India has nine principal manufacturers and suppliers of wind electric generators in the range of 225 kw to two mw units.

The Transparency International Pakistan (TIP) has claimed that it has identified corruption cases worth Rs 300 billion in different federal government departments during the last one year.

Expressing his disappointment, Chairman TIP Syed Adil Gillani said that there was no effective accountability process in Pakistan due to which corruption was on the rise. He said that the TIP referred a number of corruption cases to the National Accountability Bureau (NAB), one of Pakistan's controversial departments, but it did not initiated so far a single case against the perpetrators.

"Only the Supreme Court of Pakistan, the Public Accounts Committee of the National Assembly and the Public Procurement Regulatory Authority (PPRA) took notice of some of these corruption cases," he said.

The report released by TIP on Tuesday indicates that Pakistan is all set to hit further lows amongst the world's most corrupt nations. The 2009 report showed Pakistan climbing five numbers from the previous 47 to become the 42nd most corrupt country in the world.

Amongst the major corruption cases, Gillani said the Rental Power Projects (RPPs) of the government, was on the top. The government awarded 14 contracts in violation of the PPRA rules which caused a loss of over US$ 2 billion. The TIP had also written to the Supreme Court on this case of massive corruption and irregularity.

The sale and procurement policy of the Pakistan steel Mills had caused a reported loss of Rs 22 billion due to corruption. This corruption case had already been taken up by the apex court.

Gilani also informed of about the alleged violation of Pubic Procurement Rules 2004 by Pakistan Railways in the tender for procurement of 150 locomotives, only US made, which might have caused a loss of at least Rs 40 billion to the national exchequer. The project, he said, is presently on hold.

The other departments involved in mega corruption cases, according to Gillani, include Pakistan's Oil and Gas Development Company (OGDCL), National Insurance Corporation Limited (NICL), PRIMACO (Pakistan Real Estate Investment and Management Company Ltd), National Highways Authority (NHA), Trade Development Authority of Pakistan (TDAP), Pakistan Electric Power Company (PEPCO), Employees Old-age Benefit Institution (EOBI). Pakistan's Oil and Gas Development Company Limited made headlines in the recent past when Prime Minister Gillani appointed his jail mate and a convict who was not even a graduate as its managing director.

Despite Iran and Pakistan signing on an ambitious gas pipeline deal with its possible extension to India, the multi-billion project is unlikely to take off, according to the text of an American diplomatic cable released by WikiLeaks.

A source, whose name has been removed, in the cable confided to the US diplomat in a private conversation on June 4, 2009 that he viewed near-term implementation of the Iranian-Pakistani gas link project as "very unlikely", the cable said.

It seems like there are efforts to revive TAPI (Turkmenistan-Afghanistan-Pakistan-India), backed by US as an alternative to Iran-Pakistan-India pipeline. Here's a BBC report:

A deal has been struck on building a 1,700km (1,050m) pipeline to carry Turkmen natural gas across Afghanistan to Pakistan and India.

The Tapi project aims to feed energy-deprived South Asian markets and transit fees may benefit Afghanistan.

But details about security and funding were not addressed in the framework agreement reached by the four states.

The pipeline will have to cross Taliban-controlled regions and Pakistan's troubled border region.

Turkmenistan has previously costed the project at $3.3bn (£2.1bn, 2.5bn euros) although other estimates are as high as $10bn.

Tapi, a project which dates back to the mid-1990s, is backed by the Asian Development Bank (ADB).

The US has also encouraged the project as an alternative to a proposed Iranian pipeline to India and Pakistan.

The framework intergovernmental agreement was signed in the Turkmen capital Ashgabat by three presidents - Hamid Karzai of Afghanistan, Kurbanguly Berdymukhamedov of Turkmenistan and Asif Ali Zardari of Pakistan - and India's energy minister, Murli Deora.

"This will not be an easy project to complete - it is mandatory that we guarantee the security of the pipeline and the quality of construction work," ADP chief Haruhiko Kuroda told reporters in Ashgabat.

The sound of trumpets–or was it sirens–was heard from Delhi this week as India’s Premier got loud about his country’s future energy needs. It’s not often we are treated to such transparency. In contrast, China tried to spin its own future call on global energy through the framework of limits this week when it declared it would hold coal consumption to 4.0-4.2 Mt (million tons) by 2015. Clearly, China’s coal consumption juggernaut wants to downplay the fact that these are coal use levels 25 percent to 30 percent higher than today.

In India, meanwhile, they are willing to put some big raw numbers on the situation:

Premier Manmohan Singh told India’s energy firms on Monday to scour the globe for fuel supplies as he warned the country’s demand for fossil fuels was set to soar 40 percent over the next decade. The country of more than 1.1 billion people already imports nearly 80 percent of its crude oil to fuel an economy that is expected to grow 8.5 percent this year and at least nine percent next year. Demand for hydrocarbons — petroleum, coal, natural gas — “over the next 10 years will increase by over 40 percent,” Singh told an energy conference in New Delhi.

Question: Is it energy that India needs? Or is it food? This is, of course, roughly the same question. As we look at the chart below, showing the decline of arable land in India from 1961 – 2007, let’s consider that India’s population rose from 444 million to 1.124 billion in the same time period.

Arable land in India has been cut in half over the past 45 years, declining from 0.35 hectares per person to the current 0.14 hectares per person. Cornucopians will protest. They’ll say global productivity of agriculture has soared over the past 50 years, and they would be correct in making such a claim. But the question is: how was that advance actually achieved?

Primarily through fossil fuels, of course. Which gets us back to Premier Singh’s clarion call. With its population having nearly tripled in 50 years, and its arable land cut in half, India is going to have to become much more productive on its remaining land. To do so, it will need to significantly increase its use of fertilizer that either comes straight from the ground, like Potash, or through manufacturing–which requires natural gas. This does not even address India’s growing water problem.

Or, that like many other Asian and Middle Eastern countries, India too has gone abroad in search of farmland. | see: FarmLandGrab.org for both a running tally and newsflow on this global mega-trend

India is joining US in stifling Iran trade, according to a WSJ report today:

The Reserve Bank of India instructed the country's lenders Monday to stop processing current-account transactions with Iran using the ACU. Last Friday, the central bank said Indian firms can't use the ACU mechanism when making payments for the import of oil or gas. While the earlier order didn't explicitly mention Iran, the Islamic republic is the only major crude exporter in the ACU.

Iran has ramped up its use of the clearinghouse by more than 50% this year compared to last year, after it advertised the clearinghouse to Iranian and Indian firms in early 2009 as a way to avoid having to use dollars for their transactions and thus "sidestep the U.S. banking system altogether."

The U.S. Treasury has regularly raised the issue with India for more than a year, according to officials briefed on the exchanges. Those conversations accelerated after President Barack Obama's visit to India in early November, when he endorsed India's bid to become a veto-wielding member of the U.N. Security Council and join the Nuclear Suppliers Group, the informal body that controls the trade in nuclear technologies.

The U.S. has been pushing allies to tighten the squeeze on Iran, whose nuclear program has aroused international fears. The U.N., the U.S. and the European Union began enacting new sanctions on Tehran in June. U.S. and European officials have said in recent weeks that they believe sanctions are exacting a growing toll on Iran. The Iranian currency dropped nearly 10% in October, as Iranian traders scrambled to obtain dollars. Iran's largest shipping company defaulted on over $500 million in debt in recent months as international insurers have refused to underwrite their cargoes.

Still, the long-term impact of the latest step by India and other recent sanctions remains unclear.

Pakistan plans to add ten new nuclear power plants by 2030, according to a Dawn report:

KARACHI: Ten nuclear power plants will be established in the country by 2030 to help resolve the worsening electricity crisis, said Pakistan Atomic Energy Commission (PAEC) Chairman Dr Ansar Parvez on Tuesday.

He added that the government had assigned to the PAEC a target of generating around 8,800 megawatts by 2030. “We are optimistic about achieving this target within the stipulated period as all the requisite projects and plans are in place for this purpose,” he said.

Dr Parvez expressed these view while speaking as a chief guest at the 11th annual convocation-2011 of the Karachi Institute of Power Engineering in the vicinity of the Karachi Nuclear Power Plant.

He said that the PAEC was striving hard to enhance its role in power generation, while in the area of defence, “we are following a well-defined path that ensures that the country has a strategic capacity which is strong enough to deter and frustrate the evil designs of anyone”. He added that an immense contribution had been made by the graduates of Pakistan Institute of Engineering and Applied Sciences (PIEAS) and Karachi Institute of Power Engineering (KINPOE) to the country’s strategic programme.

In addition to the defence and power sectors, the PAEC had also been contributing to the socio-economic sector, he said. It had 14 medical centres in different cities and four more were being built. “Similarly, our agricultural centres and bio-technology institutes are also making a contribution towards the agriculture sector,” he added.

Dr Parvez, who is also the chairman of the board of governors of the PIEAS, later conferred MSc degrees in nuclear power engineering on 49 graduates along with medal and merit certificates to the position holders. He congratulated all graduating students and hoped that they would play their due role in the country’s development.

Earlier, PIEAS Rector Dr Mohammad Aslam said that the degree-awarding institute being run by the PAEC offered masters and PhD programmes in nuclear power engineering, material engineering, health physics and information technology. He said around 10 students were completing their PhD every year from the institute.

KINPOE Director Najmus Saqib traced the genesis of the institute which started as the Karachi Nuclear Power Training Centre in the early 80s and was upgraded to the masters level in 1993. He said this was KINPOE’s first convocation after its affiliation with the PIEAS.—APP/PPI

Here's a report in The News on how Pakistan's Engro company sees the economy:

KARACHI: Engro Corporation remains unsure about Pakistan’s economic trajectory as the country battles militants and tries to contain a growing fiscal deficit, a top company official said on Tuesday.

“Nobody knows what will happen in the coming months,” said Ruhail Mohammad, Engro’s Chief Financial Officer. “I have my numbers worked out. I know where sales and profit will be. But things are changing so fast that being sure remains almost impossible.”

Political and economic events of the past six months that saw the government retreating on key reforms such as raising taxes and cutting borrowing from the central bank have left businesses without a firm outlook, he said.

Although Engro posted a 79 percent rise in yearly profit to Rs6.8 billion in 2010, it continues to face problems, he said. “The policy of gas curtailment to fertiliser-makers is unjustified. The government has given us a commitment for uninterrupted supply, especially for the new plant.”

Expansion of Engro’s flagship fertiliser plant completed last year. The corporation can now produce 2.3 million tons of urea annually.

Mohammad, who was briefing journalists a day after the announcement of corporation’s financial results, said that Engro has no problem with increase in the price of gas that is used for making fertilisers. “The government must increase the price of fertiliser. We have been saying it for the last two years,” he said. “The agricultural products such as cotton, rice and wheat have seen a substantial increase in price. Farmers have the capacity to absorb rise in cost of urea.”

He, however, said that contractual obligations must not be breached once it comes to the additional capacity of 1.3 million tons, which the corporation has recently added. “For this project, we were offered gas at concessional rates for making the investment.”

The price of feedstock gas, which is used for making fertiliser, is subsidised by the government through a controversial method of making textile and other industries pay a higher price for the fuel. This has been a bone of contention for years.

“The government will be giving Rs37 billion in subsidy on urea in 2011,” he said. “There is no justification for this at all.”

On the other hand, curtailment of gas, which is basically a raw material for fertiliser, brings down production and leaves the manufacturers with no option but to raise prices to make up for the lost sales, he said.

He said the corporation plans to list Engro Foods, Engro Energy and Fertilisers at the stock exchange this year.

Mohammad said that work on Engro Energy’s venture into mining of coal at Tharparkar, Sindh, for power generation continues. “China is showing a lot of interest in the project. Financing won’t be an issue.”

The corporation will need between $300 million and $350 million for the Thar project by the end of 2012, he said.

“We have been cited as a heavily indebted group but if you look at the books closely we generate Rs35 cash for every Rs100 of debt. I think that gives us a lot of room to easily pay off the loans.”

Here's a Feb 2011 report on "Iran gas pipeline to Pakistan on hold"by Robert M Cutler in Asia Times:

MONTREAL - The bilateral Iran-Pakistan gas pipeline project is now officially suspended, as the IRIB (Islamic Republic of Iran Broadcasting) website on Sunday quoted Ali Reza Gharibi, the Iran Gas Engineering and Development Company's managing director, as saying that "construction of the ... gas pipeline for export of natural gas from Iran to Pakistan will continue as of next spring", without giving a reason for the suspension.

Events, or their absence, have confirmed the skepticism that in some quarters met rumors of the deal even before the signature of the inter-governmental agreement last May on the basis of an Iran gas pipeline to Pakistan on holdBy Robert M Cutler

MONTREAL - The bilateral Iran-Pakistan gas pipeline project is now officially suspended, as the IRIB (Islamic Republic of Iran Broadcasting) website on Sunday quoted Ali Reza Gharibi, the Iran Gas Engineering and Development Company's managing director, as saying that "construction of the ... gas pipeline for export of natural gas from Iran to Pakistan will continue as of next spring", without giving a reason for the suspension.---------The US-Indian civilian nuclear accord of 2008 is often considered as the carrot that finally tempted New Delhi to cancel its interest in the IPI pipeline, but this interpretation glosses over Iran's severe bargaining maladroitness, which took its toll. The Indian negotiators got tired of Teheran's representatives trying continually to reopen closed chapters of negotiation, insisting on providing a low-quality rather than a high-quality product, and proposing to charge liquefied natural gas prices for gas delivered overland.

The Iran-Pakistan pipeline, supplied by gas from the South Pars field, is planned to begin in Iran's Assalouyeh Energy Zone in the south and run over 1,100 kilometers before crossing the border with Pakistan. Initial capacity is said to be 22 billion cubic meters per year (bcm/y) with a possible final-stage volume of 55 bcm/y.

However, this seems unrealistic in any definite future, as recent statements by Iranian officials involved in the project have made clear that the "final-stage" volume would be achieved only by Pakistan's laying a pipeline inside Iran parallel to the one whose construction has just been suspended.

The tenuous nature of the project's planning is further indicated by the fact that, although Iran says that it has already completed construction of much of the pipeline on its own territory, even the approximate route of the pipeline through Pakistan remains in doubt. Inside Pakistan, it is planned that the pipeline would transit Balochistan and Sindh, but officials there candidly state that the route could change if China's general expressions of interest take more definite shape.

So it is still not certain where the gas will go if it ever gets from Iran into Pakistan. One strong possibility for a long time was that it would go to Pakistan's port at Gwadar in the country's southwest Balochistan, for liquefaction and transport by sea to China. That port opened a little over two years ago following a massive Chinese contribution of both capital and labor to its construction.----------

Pakistan's Chashma nuclear plant unit#2 is now online, according to SANA news:

ISLAMABAD, (SANA): Chashma Nuclear Power Plant Two (CHASNUPP-II) has started power generation on trial basis.

The work on 325-MW power plant was initiated in April 2005 and has been completed ahead of schedule with the cooperation of China.

According to official sources, the plant would formally be inaugurated soon with the addition of 300-MW electricity to the national grid would help meet power shortage and increase economic activity in the country.

China has offered to invest about $15 billion in Pakistan’s energy sector projects, according to Dawn News:

A Chinese delegation led by Cao Guanging, chairman of the state-owned China Three Gorges Project Corporation (CTGPC), discussed the Kohala, Bunji, Bhasha, Dashu and other hydropower projects in the upper and lower Indus valley during a meeting with Finance Minister Dr Abdul Hafeez Shaikh on Wednesday.

Dr Hafeez welcomed the offer and said he would try to develop consensus on issues relating to the projects. He said he would consult with the ministries of water and power and law and justice to sort out legal and other issues.

He informed the delegation about the country’s bidding rules and laws and assured it that the bidding process would be held in a transparent manner.

He said the Chinese offer had been discussed at a recent meeting of the Economic Coordination Committee of the cabinet. He said the projects identified by the CTGPC would be taken up with it but only after the completion of procedural matters.

The Chinese offer to provide financial and technical assistance for hydel and wind power projects, upgrade the transmission system and provide an integrated solution to the problems of power shortage and disruptions was elaborated by the CTGPC delegation at the Aiwan-i-Sadr on Wednesday.

Presidential spokesman Farhatullah Babar said in a statement that President Asif Ali Zardari had advised the government to consider tasking the CTGPC with building a run-of-the-river hydro project at Sukkur Barrage and asked Water and Power Minister Syed Naveed Qamar to discuss the project with the sections concerned and prepare a proposal in two months.

The president said that agreements with China ensured full security of Chinese investments in Pakistan. He said the true potential of business partnership between entrepreneurs of the two countries had yet to be fully realised.

Mr Babar said the CTGPC was already involved in a number power projects in the country and offered to build more to address the problems of power shortage. He said the corporation was currently undertaking Karot, Taunsa, Kohala and Bunji hydro-electric power projects. A letter of intent for the 720MW Karot project has been issued after the approval of its feasibility study. The project is currently at the tariff petition stage.

A memorandum of understanding for the 120MW Taunsa hydro-eclectic project has been signed and a development agreement will be signed this month. Mr Babar said the 1,100MW Kohala project was ready for tariff negotiations. A letter of intent for the project has already been issued after the approval of its updated feasibility study.

The 7,100MW Bunji project is ready for site survey. The MoU for the project was signed in August 2009.

Mr Babar said that wind power projects, including Sindh’s first and second wind farms and Punjab’s wind and solar projects, were also in an advanced stage.

Pakistan's president has finally realized and stated that US presence in Afghanistan is destabilizing Pakistan in an interview with the the Guardian newspaper:

"Just as the Mexican drug war on US borders makes a difference to Texas and American society, we are talking about a war on our border which is obviously having a huge effect. Only today a suicide bomber has attacked a police compound in Baluchistan. I think it [the Afghan war] has an effect on the entire region, and specially our country," Zardari said.

Asked about harsh criticism of Pakistan's co-operation in the "war on terror" published in a White House report last week, Zardari said Pakistan always listened to Washington's views. But he suggested some members of Congress and the US media did not know what they were talking about when it came to Pakistan.

"The United States has been an ally of Pakistan for the last 60 years. We respect and appreciate their political system. So every time a new parliament comes in, new boys come in, new representatives come in, it takes them time to understand the international situation. Not Obama, but the Congress, interest groups and the media get affected by 'deadline-itis' [over ending the Afghan war]," Zardari said.

"I think it is maybe 12 years since America has become engaged in Afghanistan and obviously everybody's patience is on edge, especially the American public, which is looking for answers. There are no short-term answers and it is very difficult to make the American taxpayer understand."-------"Our emphasis has been on security rather than our commerce and we need commerce for our survival.

"We have all the gas in the world waiting to go through to markets in India and the Red Sea but it cannot be brought in until Afghanistan is settled. So Afghanistan is a growth issue for us. I think most of the time, the quantification of the effect of the war is not calculated [by the US].------According to senior intelligence officials, the "war on terror" has cost the Pakistani economy approximately $68bn (£42bn) since 2001.

More than 33,300 Pakistani civilians and military personnel have been killed or seriously injured. Last year's record-breaking floods added to the strain on the economy.

Zardari said the security situation was also undercutting efforts to strengthen democratic institutions bypassed or overturned during the military rule of his predecessor, General Pervez Musharraf. "Democracy is evolving. It's a new democracy. It takes time to bring institutions back. Destroying institutions during a decade of dictatorial regime is easy ... So there is a political impact as well as an economic impact."

Pakistani officials say relations with the US reached a "low ebb" following the recent row over Raymond Davis, a CIA contractor who shot dead two Pakistanis; a CIA drone attack in Pakistan's tribal areas last month that accidentally killed dozens of civilian elders meeting in a jirga (council), and Pakistan's suspicions that it is being excluded from discussions about an Afghan peace deal.

Zardari, who is expected to visit Washington next month, said he would ask Obama to share drone technology with Pakistan so future attacks could be planned and directed under a "Pakistani flag". Although this request had been turned down in the past, he said he was hopeful the Americans would be more receptive this time, given the huge anger and rising anti-American feeling that the drone attacks were causing.

Zardari and other senior government officials said all parties felt a sense of growing urgency about forging an inclusive peace settlement in Afghanistan, but the process must be "Afghan-led". Pakistan was ready to play its part, consistent with its national interest, they said...

Pakistan's prime minister set up an energy council to tackle the current energy crisis, according to Radio Pakistan:

.. He said a team effort was required for a mutually rewarding and strategic partnership between the government and the energy sector as he firmly believed that the industry was capable of turning the tide and delivering results.--------The Prime Minister said “Fuelling the Future” therefore requires finding new oil and gas reserves through aggressive exploration activities, optimizing production from existing fields by applying cutting-edge technology, enabling gas imports from across the borders via regional pipelines and LNG shipments.

He said the Government was encouraging foreign investments in energy infrastructure development and in a broader context, development of alternate sources of energy and energy conservation, for a sustainable energy supply.He said Pakistan was an energy-deficit country, meeting nearly 90% of its oil requirement through imports.--------He said the government was struggling to keep up with an increasing energy import bill which has adversely affected country’s trade deficit and pointed that it was difficult for the government to pass on the full impact of the rising international oil prices to the people.----------He said development of local energy sources, including hydel projects and the Thar coal-fields, also remains a high priority for this government.He said the government has already added 1700 MW in the national electricity grid during last three years and many more power projects were at various stages of development. “We have even resolved the basic problem which had held us back in utilizing the vast coal reserves in Sindh for producing energy,” he said.----He said the share of natural gas as one of the primary energy source has increased from 40 percent in 1999 to 60 percent in 2010 and currently the entire domestic natural gas production was being consumed while providing for approximately 50 percent of total energy requirements. The Prime Minister said holding of the international event being clearly indicated the priority accorded to highlighting the country’s energy issues by the Petroleum Institute being the representative body of the most important public and private sector companies in the oil & gas sectors of the country. He said Pakistan today faced a number of challenges including security issues arising from its fight against terrorism and a growing trade deficit as a result of rising energy prices globally.The Prime Minister said though the challenges have caused financial constraints in the country, the government was however determined to face these in the same way as was being done in the political arena. --------He said the Energy Conference that will have working sessions on oil & gas exploration & production, LNG imports, development of Thar coal-fields, power sector progress, oil infrastructure development and safety recommendations for the energy sector. ----------The event also saw the formal launch of the 2011 Pakistan Energy Outlook Document.The conference while noting the almost 80 per cent growth in Pakistan’s energy requirement in the past 15 years from 34 million tons oil equivalent (TOE) in 1994-95 to 61 million TOE in 2009-10 would deliberate on ways to find a way out to find cost effective solutions.The country’s energy supply currently comes primarily from indigenous natural gas which is 45% of the energy mix and oil imports at 35% of the energy mix, with the balance from hydel at 12%, coal at 6% and nuclear at 2% of the mix respectively.Chief Executive Officer of Petroleum Institute of Pakistan (PIP) Saleem Piracha presented an overview of the Pakistan Energy Vision 2011-2026, while Chairman PIP Zaiviji Ismail, Country chairman of Shell Pakistan spoke about the energy need, demand and the measures being taken to meet the shortfall.

...By all accounts, the violence was allegedly instigated by a right-wing regional party which is struggling to regain lost political ground in the Konkan coastal area where Jaitapur is located. The upshot of such cynical politics: one 'protestor' dead when police fired on irate villagers, at least 20 wounded, a hospital damaged and passenger buses gutted by the mob. ---------This is tragic because there are much more significant and vexing issues at stake in Jaitapur. After the disastrous tsunami-induced meltdown in Fukushima, Japan, should India reconsider its push towards nuclear energy? (With the landmark nuclear deal with the US under its belt, India can now import reactors and nuclear fuel.) Will acquiring large tracts of land for nuclear power stations again set the government on a collision course with sections of the unwilling - and sometimes uninformed - farmers?-------Critics like Praful Bidwai believe that India's nuclear energy drive will sound the death knell of precious ecosystems - six 1,650 megawatt reactors will be built at Jaitapur on the west coast, it is planned, in what would turn out to be the world's largest 'nuclear park'. They say the government has forcibly acquired farmland using a colonial law to build the plant. Mr Bidwai, who visited Jaitapur, writes that the nuclear plant will be situated on fertile farmland, not barren wastelands as the government would have people believe. Then there is the threat the plant poses to thriving fisheries. Officials say no local will be displaced from his land, although more than 2,000 people have had to sell parts of their land. So are the protests about better compensation for land, and guarantees about safety?

Most scientists I spoke to dismiss a lot of what the campaigners say, insisting that nuclear power is really the only option India is left with to meet its growing energy needs. An astonishing 400 million Indians continue to live in the dark, without electricity. "You have to choose the lesser evil - more carbon dioxide or the threat of radiation," one told me. Smoke-belching thermal power plants use the atmosphere as a "sewer" and impact climate change. Solar and wind energy cannot meet India's energy demands, they say. Ergo, nuclear power, they say, is the only sensible and clean option. That is why India is planning to set up some 30 reactors over as many years and get a quarter of its electricity from nuclear energy by 2050.

Scientists agree the government has to tread carefully in building consensus at the grassroots and while acquiring farmland to set up the nuclear plants - there is no room for forcible acquisition of land at unremunerative prices.

Then there is this shrill debate over the safety of the plant. Critics point out that the French-built reactor meant for Jaitapur has still not been approved by nuclear regulators worldwide. They say that the site is seismically hazardous - the area was apparently hit by 95 earthquakes between 1985 and 2005 - and since it will be built on the coast will be prone to tsunamis.

Scientists dismiss these arguments as naive and ill-informed. India, they say, will not buy these third generation reactors until international and local regulators clear them. India's nuclear regulators say that Jaitapur is in a "significantly low seismic zone" compared with Japan and Fukushima. Also, the reactors will be built on a cliff 82ft (25m) above the mean sea level. With its 20 reactors, India, scientists insist, has a good safety record. (There was a turbine room fire at a plant in 1993, and a sodium leak in another in 2000). "There have been no serious incidents. There has been no radiation leak. Our record is clean," one official said....

The new Pakistan Power Report forecasts Pakistan will account for 1.12% of Asia Pacific regional power generation by 2015, with the chance of possible generation surplus if investment rises and the country’s substantial transmission losses can be brought under control. BMI’s Asia Pacific power generation assumption for 2010 is 7,761 terawatt hours (TWh), representing an increase of 5.1% over the previous year. We are forecasting a rise in regional generation to 9,901TWh by 2015, representing growth of 21.2% in 2011-2015.In 2010, Asia Pacific thermal power generation totalled an estimated 6,187TWh, accounting for 79.7% of the total electricity supplied in the region. Our forecast for 2015 is 7,704TWh, implying 18.6% growth that reduces the market share of thermal generation to 77.8%. This is thanks largely to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. Pakistan’s thermal generation in 2010 was an estimated 64.2TWh, or 1.04% of the regional total. By 2015, the country is expected to account for 0.83% of regional thermal generation.Gas is the dominant fuel in Pakistan, accounting for an estimated 50.9% of primary energy demand (PED) in 2010, followed by oil at 31.0%, hydro-electric energy at 9.6% and coal with a 6.9% share. Regional energy demand is forecast to reach 5,508mn tonnes of oil equivalent (toe) by 2015, representing 20.0% growth from the estimated 2011 level. Pakistan’s estimated 2010 market share of 1.54% is set to ease to 1.51% by 2015. Pakistan’s estimated 2.9TWh of nuclear demand in 2010 is forecast to reach 7.0TWh by 2015, with its share of the Asia Pacific nuclear market rising from an estimated 0.53% to 0.90% over the period.Pakistan now shares eighth place with Malaysia in BMI’s updated Power Business Environment Ratings, thanks to its relatively high level of renewables (mostly hydro) usage and healthy energy demand growth prospects. Several country risk factors offset the industry strength, but the country is in a good position to keep clear of the Philippines below.BMI now forecasts Pakistan real GDP growth averaging 3% a year between 2011 and 2015, with the 2011 growth assumption being 1.5%. The population is expected to expand from 173mn to 194mn, with GDP per capita increasing by 24% and electricity consumption per capita rising by 5%. Power consumption is expected to increase from an estimated 75TWh in 2010 to 87TWh by the end of the forecast period. After power industry usage and transmission losses, there is scope for a supply surplus by 2015 of around 4TWh, assuming 2.9% average annual growth in electricity generation during 2011-2015.Between 2010 and 2020, we are forecasting an increase in Pakistani electricity generation of 32.3%, which is below average for the Asia Pacific region. This equates to 15.3% in the 2015-2020 period, up from 14.8% in 2011-2015. PED growth is set to increase from 20.5% in 2011-2015 to 22.4%, representing 47.4% for the entire forecast period. An increase of 50% in hydro-power use during 2011- 2020 is a key element of generation growth. Thermal power generation is forecast to rise by just 8% between 2011 and 2020, with nuclear usage up 314% from a low base. More details of the long-term BMI power forecasts can be found at the end of this report.

The government has paid Rs120 billion overdue electricity subsidies to improve the financial condition of power companies, leaving it with the option of either letting the budget deficit slip to 6.3 per cent or playing with the figures to restrict it to 5.5 per cent.

The payments would partially improve the balance sheet of the power sector that has been crippled by the government’s inability to pay price differential claims. The arrears that have increased to Rs288 billion are one of the main reasons for the massive power shortfall, recorded at 7,200 megawatts on Tuesday, as companies are not running at optimum capacity. The capital injection will enable power companies to purchase fuel for electricity generation.

The payments have been made to the Pakistan Electric Power Company (Pepco), Pakistan State Oil, oil refineries, power generation and distribution companies. However, these will widen the budget deficit by another 0.7 per cent of national income, torpedoing the revised fiscal framework.

The government that has been struggling to restrict the budget deficit to Rs941 billion or 5.5 per cent of Gross Domestic Product (GDP) is now facing a situation whereby the gap may swell to Rs1,078 billion or 6.3 per cent.

Finance ministry officials said so far the ministry was reluctant to pay its dues because of the negative implication for the budget deficit – the gap between national income and spending. Officials added that the government paid Rs98 billion on Wednesday while the remaining Rs22 billion would be released today (Thursday).

Sources said the finance ministry was considering deferring payment of other subsidies like those for agriculture and fertilisers to the next financial year. There is an option to even defer some of the electricity subsidies of this fiscal year.

Any attempt to play with the figures may invite the International Monetary Fund’s wrath that in the past slapped penalties after noting tempering with budget figures.

According to the Budget Strategy Paper 2011-12, the government will pay Rs186 billion electricity subsidies by June-end. The accumulative power subsidy for this year and the previous two years amounts to Rs306 billion. The finance secretary was not available to comment on the issue.

The circular debt still stands at Rs168 billion even after Rs120 billion payments. The major factor for the debt now is the refusal of provinces to pay their dues to Pepco. The four provinces, Fata and AJK owe Rs106 billion to Pepco, according to official documents. Of this amount, a major chunk of Rs76 billion is due to be paid by the provinces. Punjab owes Rs9 billion whereas Sindh owes Rs37 billion.

The ongoing massive power shortage is partly because of oil and gas shortages and partly because of inefficient power plants. Although the government has paid a handsome amount, there is still a big question mark on the sustainability of the power sector due to resistance to reforms. The government is not ready to completely disband Pepco and it is also not amending the National Electric Power Regulatory Authority Act that is necessary to ensure full power tariff recovery.

Karachi Electric Supply Company’s (KESC) tariff structure is another source of concern. This year alone, the federal government will pay Rs40 billion subsidies to KESC on account of price differential.

The other major factor is longstanding receivables from private consumers. All the distribution companies are unable to recover Rs69.7 billion from private consumers which are overdue from two months to three years, according to the documents.

Pakistan Petroleum is seeking tenders to develop oil and gas resources in Pakistan, according to Oil Voice:

Exploration in these licenses is expected to convert conventional and unconventional hydrocarbon resources in to reserves. There are stratigraphic traps, tight gas, shale gas etc.----------Dera Ismail Khan Block Overview:The block lies in the Suleiman Foredeep with Sargodha High in the East, Khishor & Marwat Ranges in the North, Suleiman Foldbelt in the West and the Zindapir anticlinorium in the South. The development of Suleiman Foredeep is related with an uplift of the Suleiman Range, which is believed to be related to early and late Tertiary inversion of extensional and trans-tensional basins along the northwest margins of the Indian continental plate.-------------The block contains the stratigraphic play at Eocene and Paleocene levels. The Sembar Formation (Cretaceous) is the proven source rock in the nearby Dhodak & Salsabil Gas Fields, which lies in the Gas window in the West of D. I. Khan block. The primary reservoir targets are the Stratigraphic pinch out of Habib Rahi Limestone (Eocene) and the truncations of Lower Ranikot Formation (Paleocene). The Secondary target is the Pab Sandstone (Cretaceous). The seal is comprised of Intra Eocene Shales and the Shales of Chitarwata Formation (Oligocene) above the Base Oligocene unconformity. The Lower Ranikot and Pab Sandstone are the proven Gas/Condensate reservoir in the Dhodak and Salsabil Gas Fields.

The Kamiab-1 well (Amoco, 1974) drilled in the East encountered the significant Gas shows in the Lower Ranikot Formation.--------Sirani Block Overview:The Sembar Formation (Lower-Cretaceous) is the proven source rock in the area. Sands of Lower Goru Formation (Lower Cretaceous) are producing in nearby fields and have good reservoir quality. Shales of Upper Goru & intraformational shales provide the seal. Tilted Faults Blocks are expected in the Block.• Four leads identified on vintage seismic data. New seismic likely to yield more leads• Proximity to the producing Badin Oil fields to the west• Possibility of finding additional leads in southern marshy area where no seismic data has been acquired. Good shows encountered in some wells in the block• Nearby existing infrastructure• Low cost drilling operations as minimum problems are expected.• Early production through Extended Well Testing (EWT)

Naushahro Firoz Block Overview:The Naushahro Firoz block lies in a zone with a proven petroleum system from different reservoirs. The Zamzama gas condensate discovery (2.3 Tcf and 12 MMbo)) from Late Cretaceous Pab sandstone lies to the west and Sawan gas discovery (1.5 Tcf) from Lower Cretaceous Lower Goru sandstone lies to the East of the block. Sui Main Limestone (SML) of Eocene age is a proven reservoir in a number of discoveries (over 2 Tcf reserves) located in the north of the block. The reservoir quality of SML is also proven by the Sagyun-01 well drilled in the block and wells drilled in the surrounding area. One lead and a possibility of another lead identified at SML level on sparse vintage data.-----------Jungshahi Block Overview:The Jungshahi block lies to the east of two gas discoveries. An untested surface lead is separated from a gas field by a broad syncline. The Block is close to the Kitchen area. Untested surface anticlines are present in the block. Proven reservoir rocks of Paleocene and Cretaceous are present. Significant gas shows have been observed in Lower and Upper Ranikot formations in the wells drilled in the block. The Block is located close to an existing gas pipeline / infrastructure and commercial hub at Karachi. Early production is expected through EWT.

Pakistan improves incentives in new tight gas exploration policy, according to platts.com:

Pakistan has approved a new tight gas exploration policy with improved incentives as compared with its 2009 policy, to overcome the country's gas shortfall and attract foreign investment, a petroleum ministry official said Wednesday.

Under the new policy, exploration companies will be offered 40-50% higher prices for the gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009.

Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price.

Besides, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.

Even with the improved prices for the tight gas to be paid to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.5/Btu for the gas compared with $12.3/Btu for gas imports.

"It [tight gas] is a more feasible option for the economy as even after giving additional incentives the cost of gas available will be less than imported gas and there will be no burden on the foreign exchange reserves for additional imports," Umer Bin Ayaz, a research analyst at JS Global Equities in Karachi, said.

Tight gas is typically stuck in very tight formations underground -- trapped in hard rock or in a sandstone or limestone formations that are unusually impermeable and non-porous.

As exploration is more difficult and the technology required more expensive, companies do not typically go in for exploration until given attractive incentives.

Gurgaon, located about 15 miles south of the national capital, New Delhi, would seem to have everything, except consider what it does not have: a functioning citywide sewer or drainage system; reliable electricity or water; and public sidewalks, adequate parking, decent roads or any citywide system of public transportation. Garbage is still regularly tossed in empty lots by the side of the road.

With its shiny buildings and galloping economy, Gurgaon is often portrayed as a symbol of a rising “new” India, yet it also represents a riddle at the heart of India’s rapid growth: how can a new city become an international economic engine without basic public services? How can a huge country flirt with double-digit growth despite widespread corruption, inefficiency and governmental dysfunction?

In Gurgaon and elsewhere in India, the answer is that growth usually occurs despite the government rather than because of it. India and China are often considered to be the world’s rising economic powers, yet if China’s growth has been led by the state, India’s growth is often impeded by the state. China’s authoritarian leaders have built world-class infrastructure; India’s infrastructure and bureaucracy are both considered woefully outdated.

Yet over the past decade, India has emerged as one of the world’s most important new engines of growth, despite itself. Even now, with its economy feeling the pressure from global inflation and higher interest rates, some economists predict that India will become the world’s third largest economy within 15 years and could much sooner supplant China as the fastest-growing major economy.

Moreover, India’s unorthodox path illustrates, on a grand scale, the struggles of many smaller developing countries to deliver growth despite weak, ineffective governments. Many have tried to emulate China’s top-down economic model, but most are stuck with the Indian reality. In India, Gurgaon epitomizes that reality, managing to be both a complete mess and an economic powerhouse, a microcosm of Indian dynamism and dysfunction.

In Gurgaon, economic growth is often the product of a private sector improvising to overcome the inadequacies of the government.

To compensate for electricity blackouts, Gurgaon’s companies and real estate developers operate massive diesel generators capable of powering small towns. No water? Drill private borewells. No public transportation? Companies employ hundreds of private buses and taxis. Worried about crime? Gurgaon has almost four times as many private security guards as police officers.

“You could call it the United States of Gurgaon,” said Sanjay Kaul, an activist critical of the city’s lack of planning who argues that Gurgaon is a patchwork of private islands more than an interconnected city. “You are on your own.”

Gurgaon is an extreme example, but it is not an exception. In Bangalore, outsourcing companies like Infosys and Wipro transport workers with fleets of buses and use their own power generators to compensate for the weak local infrastructure. Many apartment buildings in Mumbai, the nation’s financial hub, rely on private water tankers. And more than half of urban Indian families pay to send their children to private schools rather than the free government schools, where teachers often do not show up for work.

World Bank commits to helping Pakistan build energy projects, according to APP:

ISLAMABAD, Jun 10 (APP): The World Bank (WB) has assured to consider financial assistance for more mega hydro electric and wind power projects in Pakistan and to continue its assistance for ongoing water and power sector projects.Country Director World Bank in Pakistan, Rachid Benmessaoud along with a four- member delegation called on the Minister for Water and Power, Syed Naveed Qamar here on Friday.Mr. Benmessaoud said that the WB is already providing financial assistance for electricity distribution and transmission improvement project (EDTIP) which is likely to be completed within the prescribed time frame.

This will improve the transmission and distribution network in the country by replacing the existing infrastructure. Allocated funds of US$ 15.6 million for technical assistance of institutional strengthening and capacity building of power distribution companies.A pilot project for installation of advance metering infrastructure (Smart meters) is also being funded by WB, adding that Terbela extension IV project has also signed with WAPDA which will generate additional 300 MW and completed within three years.The Bank also fully supports the power sector reforms, he said and assured that the bank will take up more hydel and wind power projects for assistance to resolve the energy crisis,he added.The Minister for Water and Power, Syed Naveed Qamar offered various mega projects for assistance and said that the WB support is very important for the power sector.He said that the government is taking all possible measures to resolve the energy crisis. Recoveries are being improved, zero tolerance policy for defaulters, rehabilitation of Gencos, upfront tariff for wind power, power sector reforms are underway and operation and maintenance of Gencos through private sector.He said that more than 2000 MW has been added in the national grid. Work on various hydro and water sector projects have started, he observed.The Minister asked the PEPCO to immediately complete the procedure for hiring international procurement adviser and smart metering project so that the disbursement could be started at the earliest.

Here's an International Power announcement of Uch II power plant in Pakistan:

(London – 21 January 2011) International Power plc is pleased to announce that it has signed the financing to develop Uch II, a 375MW CCGT extension to the existing 572MW Uch plant in Pakistan. Uch II will be 100% owned by International Power.

Philip Cox, CEO of International Power, said, "Uch II represents an excellent opportunity for International Power to add new capacity adjacent to our existing Uch site and help tackle the issue of power shortages in the country. A key attraction of this investment is that it will also use domestic gas to produce competitively priced power."

The total project cost is estimated at US$480 million (£300 million), which will be funded by debt and equity in a 75:25 ratio. International Power’s equity investment of US$120 million (£75 million) will be funded from current liquid resources. The US$360 million (£225 million) of debt will be provided by multilateral and bilateral agencies that include the Asian Development Bank, International Finance Corporation, Korean EXIM and the Islamic Development Bank.

The electricity generated from Uch II will be sold through a 25-year US$ indexed power purchase agreement with the National Transmission and Despatch Company, which is wholly owned by the Government of Pakistan. Gas will be supplied from the existing gas field under a gas supply agreement with the Oil and Gas Development Company of Pakistan.

The Uch II project will be constructed under an EPC contract with Hyundai Engineering Company and Descon Engineering. It will comprise two GE9E gas turbines and one steam turbine. The plant is expected to be operational in 2013 and will be operated by the existing Uch facility under an Operations and Maintenance agreement.

Two private sector power projects, having cumulative net capacity of 390 megawatts, have been added to the national grid in the last one month.

This was told in a meeting of the Private Power and Infrastructure Board (PPIB) held on Monday under the chairmanship of Minister for Water and Power Syed Naveed Qamar, said a press statement.

One was a gas-based independent power producer (IPP) named Fauji Daharki Power Project with a capacity of 176.6 MW and was commissioned on April 22 and the other was 213.8MW Hubco-Narowal Power Project which started commercial operations on May 16.

Participants of the meeting said that another three IPPs were in construction phase which included 209MW Bhikki Power Project, which is expected to be commissioned soon, 84MW New Bong Hydropower Project and 375MW Uch-II Power Project based on gas, expected to be completed by 2013.

Qamar said that the government believed in the policy of facilitating investors and removing hurdles in processing of projects, adding the Power Generation Policy for 2002 was being reviewed to make it more investor-friendly, in consultation with public and private sector stakeholders.

He added that in order to make electricity affordable, the concept of converting existing thermal IPPs to cheaper fuels like coal, LNG, etc was being seriously considered.

Appreciating the role of PPIB in bringing investment in the power generation sector, the minister asked PPIB to focus on the development and implementation of power projects based on water and coal for medium and long-term needs.

The European Union has signed an agreement to provide 225 million euros for development projects in Pakistan, according to The News:

The agreement was signed by the Finance Minister Dr Abdul Hafeez Shaikh and German Federal Minister for Economic Cooperation and Development Dirk Niebel and European Commissioner for Development Andris Piebalgs at the finance ministry.

The money will be spent from 2011 to 2013 on developing programmes for rural and natural resource, education and human resource, governance and trade development.

Under the arrangement, the EU has committed an annual grant of 75 million euros. Over the three-year period, 90 million euros will be spent on rural development and natural resources management, 70 million euros on education and human resource development, 50 million euros on governance and 15 million euros on trade development.

Briefing newsmen about the meeting, Shaikh appreciated the EU and Germany for their support to economic development in Pakistan.

The minister discussed the current economic situation and measures taken by the government for stabilising and increasing revenue through tax reforms.

The minister said that despite narrow fiscal space, Pakistan has not compromised on social and poverty-related spending and is pursuing a strategy to promote growth.

“As a result of the initiatives to stabilise economy, indicators have shown improvement and the economy is able enough to withstand challenges,” he added.

The minister thanked Germany for supporting Pakistan’s efforts to get access to the EU markets.

The visiting dignitaries appreciated Pakistan’s commitment for sustaining the ongoing economic reforms programme and reaffirmed their support to Pakistan in this regard.

They expressed hope that Pakistan would continue with the reform process.

Niebel said that under the recently concluded bilateral negotiations, Germany had committed additional 78 million euros for education, energy, health and governance besides assuring 12 million euros for the Multi Donor Trust Fund.

Out of the 78 million euros committed by Germany, 48.5 million euros will be spent on energy, 13 million euros on health, 9 million euros on governance, one million euros on education and 6.5 million euros outside these priority areas.

A daily on Monday described the acute power shortage in Pakistan as an “existential emergency” as it called for establishing a national power management plan.

An editorial in the News International noted: “Our installed sources of power generation exceed our power needs and if all were working at capacity we would be a net exporter of power.”

Giving statistics, it said: “Our power shortfall has now reached 5,000 megawatts. We are generating 13,240 MWs against a peak demand of 18,065MWs.

“Industry has ground to a halt; productivity in key sectors like that of cotton goods has dropped almost to zero in places like Faisalabad, the hub of the cotton spinning industry. In Lahore loadshedding has reached 14 hours a day.”

The editorial said that the problem is affecting every province.

It went on to say that at the heart of the matter “lies the inability to resolve the circular debt crisis and an embedded inefficiency in power distribution along with power theft”.

Taking a dig at government announcements to tackle the electricity situation, the editorial said: “We have lost count of the number of prime ministerial pronouncements on the management of the power crisis, the empty plans that never seem to materialise and the grand political statements that this or that much power has been added to the system since this government took office.”

Calling it “an existential emergency”, it added that the country needs a national power management plan.

Sindh govt allocates Rs. 3.7 billion for Thar coal development in 2011-12 budget, according to Dawn:

KARACHI, June 11: Tormented by the power shortages the Sindh government focuses on developing indigenous coal reserves. In the next Annual Development Plan it has earmarked Rs3710.937 million for Thar coal project.

For energy sector a total of Rs1214.499 million has been kept in the ADP 2011-12. This include Rs1100 million for the coal gasification project.

Sindh Finance Minister Syed Murad Ali Shah while explaining salient features of the budget for 2011-12 said: “Thar coal reserves of 175 billion tons are ample for provision of cost-effective energy for centuries”.

He said that once the reserves were properly exploited they could help in generating 20,000MW by 2020.

Recently, in international competitive bidding, two Chinese companies, an Australian company, and Pakistan Petroleum Limited participated.

As a result, two Chinese companies have been selected to undertake coal exploration, power generation and establishing petro-chemical complex at two blocks of Thar.

He said the bankable feasibility study for joint venture project of the Sindh government and Engro was created to boost the potential in a record period of eight months.

The Sindh government and the federal government have included this project in the list of projects to be taken up with the Pak-China Joint Energy Working Group (JEWG) formed during the last visit of the Chinese prime minister to Pakistan, he said.

Leading Chinese companies have shown strong interest in executing this project. The mining and power generation from this project is expected in 2015-16 depending upon the financing arrangements for the project.

The test burn at Underground Coal Gasification (UCG) is expected during coming financial year. After successful testing, the project will be scaled up to produce 2x50MW electricity.

He said the government has made serious efforts to provide critical infrastructure for development of Thar coal.

A scheme for bringing water to Thar from Makhi Farash has been approved by ECNEC, feasibility studies for effluent disposal and laying of broad-gauge railway line are to be completed in June, 2011.

Work on improvement and widening of road for movement of heavy machinery from Karachi to Mithi-Islamkot is expected to start in next year.

According to rough calculations an amount of $1.20 billion is needed over a period of next five years to develop the required infrastructure for Thar.

Serious efforts are also in place to exploit the Gharo-Keti Bandar wind corridor.

During the Sindh chief minister`s recent visit to South Korea an MoU to generate 2000MW of wind energy was signed with Korea Southern Power Company.

The issue of electric power is of great priority for Sindh. The CCI has given approval to the removal of a limit on the ceiling of 50MW, which was earlier set at which provinces could construct power plants.

The Sindh government has signed a letter of intent with the Three Gorges Project Corporation, China`s premier electricity producer, to help explore the hydro power potential in Sindh.

A team from CWE, a subsidiary of the Three Gorges, recently visited Sukkur Barrage to gauge the potential for constructing a power plant.

Under the village electrification programme 446 villages were provided electricity during 2010-11, while the process for providing power to 350 more villages is underway.

Here's a Dawn report on progress of goal gasification effort in Pakistan:

KARACHI: National Assembly Standing Committee on Science and Technology has asked the federal and provincial governments to provide the allocated funds to Thar coal gasification project to speed up work on the power generation project.

Chairman of the committee Dr Abdul Kadir Khanzada, while speaking at the presentations of Thar coal and gasification projects here Saturday, said that any delay in Thar coal and gasification trial and pilot projects will further delay the addition of much needed electricity to country’s economy and industrial sector.

Representatives of Sindh Coal Authority, project coordinator Engro, Oracle Coalfield UK, PCSIR and coal gasification project gave presentations to the committee on the progress of their projects.

He said that both federal government and Sindh government should provide the committed share of the allocated funds for these projects. If you want to run the projects you need to fulfil your obligations and provide the necessary support to the on-going projects in Thar coal field.

He also asked the project runners to take media to the site to show the potential for coal gasification and power generation in Thar.

He also urged the federal Minister for Science and Technology Mir Changez Khan Jamali to provide support and funds to Pakistan Council of Industrial and Scientific Research (PCSIR) so that it can upgrade its laboratory test project of coal gasification to a pilot project and then lead to commercial production.

“You need to support them as the entire nation is now looking toward Thar coal projects as the only solution to existing power crisis”, he added.

Dr Khanzada noted that even the allocations for these projects were not sufficient.He asked PCSIR to hold a meeting next week at its premises to demonstrate the trial production of gas and electricity based on Thar coal.

Other members of the committee Mir Changez Khan Jamali, Mrs Shamsul Sattar Bachani, Justice (rtd) Fakhar-un-Nisa Khoker, Zafar Beg Bhittani and Chaudhry Mahmood Bashir Virk in their remarks also supported the projects and urged the government to extend wholehearted support to scientists so that Thar coal can be utilized for power generation.

The Minister Mir Changez Jamali assured the NA committee for removing all the difficulties hindering the projects and said all possible support will be provided to coal gasification projects and also to power generation projects under public-private partnership.

Earlier, Specialist Science and Technology of Planning Commission, Dr M Ashraf Moten in his presentation said that coal has to be declared as a matter of national security and strategic importance to attract investment from donors and multilateral institutions.

He said that total investment requirement for 100 megawatts of electricity through underground coal gasification is $ 115.6 million and added that only 7.48 million have been received so far.

Dr Moten said that 36 holes have been drilled and stuffed through 12” and 24 “ diameters carbon steel piping and cemented and tested for gasification.

Director General PCSIR said that the conversion of coal into diesel will cost only Rs 18 to 19 per litre and cost of power generation from coal gasification will is also lower and sustainable.

Siemens Pakistan chief says 4,000MW of electricity can be produced with $1.5 billion investment that can help overcome energy crisis, according to Pakistan Today:

KARACHI - The prolonged hours of unscheduled load shedding can be brought to an end with just a small investment of $1.5 billion. “Currently, the country is facing a shortfall of 4,000MW in the production of electricity, but this can be overcome by investing only $1.5 billion, which is a small amount compared to the scale of the power crisis that has paralysed the economy and making lives miserable for the people,” Sohail Wajahat H Siddiqui, managing director/CEO of Siemens Pakistan and a member of the Pakistan Business Council (PBC), told Pakistan Today.The PBC is a body of the elite business groups in the country that holds interactions with government officials, including the president and the prime minister, to find out ways and means to overcome the energy and economy crises and to put the economy on the path of stability. Siddiqui said that under the short-term strategy, an investment of $1.5 billion is required to produce 4,000MW of electricity that would end the shortfall in production and demand.“I’ve have submitted a comprehensive report to the government from the platform of the Pakistan Business Council to overcome the energy crisis on the short-term and long-term basis,” he added. He said that under the short-term strategy, the upgrading and overhauling of the existing power plants would be sufficient to enhance output of electricity by 4,000MW, adding that for the long-term plan, the government should focus on the generation of electricity from wind, solar, hydel and gas.“Power generation from the wind and solar technology is expensive, but this technology is essential to develop a mixed energy culture,” he said. “If the crude oil prices shoot above $200 to $250 a barrel in the future, how would the economy and consumers be able to face this crisis?” he questioned, adding that in this situation, alternative energy resources prove helpful to generate low-cost electricity.Siddiqui said that the government should make serious efforts to develop the energy sector, which has been neglected in the past, creating an unprecedented energy crisis in the country. “Had the previous governments developed big dams and established new power plants in the past to generate additional electricity and to meet the country’s growing demand, the country would not have been facing this crisis now,” he argued.He said that Pakistan is suffering a loss of about two percent of the GDP a year because of the energy crisis that triggers unemployment, affects industrial production, tax revenue collection and paralyses overall economic activity in the country. “A will is required to eliminate the electricity shortage and to ensure a smooth sailing of the ailing economy,” he said, adding that the PBC has decided to play a crucial role to support the government in overcoming major problems.

Pakistan is ready to approve a Norwegian company’s request to build a 150-megawatt wind farm, the first part of a $1 billion plan that could boost by a third the announced capacity for clean-energy power plants, according to Bloomberg News:

Pakistan is seeking to diversify its energy supplies away from oil and gas and boost electricity production. The nation has a power deficit of 3.6 gigawatts a day, or more than the output of two nuclear reactors, triggering 12-hour blackouts that cause riots and close factories in cities nationwide.

The Alternative Energy Development Board is willing to allow a project proposed by NBT AS, a Lysaker-based clean energy company that plans to build the facility in the Sindh province “wind corridor” north of Karachi, according to Said Arif Alauddin, chief executive of the government agency.

“They came to us saying they have got the money and relationship with the Chinese and they want to invest,” Alauddin said from the port city of Karachi. “As soon as they pay the fee, we will issue that letter to them. We will be able to give them the land if we can see they can deliver.”

Pakistan has almost 1 gigawatt of projects under construction or with financing agreed and 498.5 megawatts more of wind programs announced, according to Bloomberg New Energy Finance data. Only 6 megawatts of wind energy facilities are operating in the nation. It’s the ninth-poorest in the Asia- Pacific region with a 2009 gross domestic product per capita of $2,609, according to Bloomberg data.Chinese Financing

NBT Chief Executive Officer Joar Viken said he plans to tap financing for his project from one of three Chinese turbine makers that his company is talking with about supplying machinery for the facilities.

“We think Pakistan is a very good environment and has a very good framework,” Viken said in a phone interview from New York. “Because we get everything in U.S. dollars, we don’t have a huge currency risk.”

Viken said NBT would issue a tender to Goldwind Science & Technology Co., Sinovel Wind Group Co. and China Energine International Holdings Ltd. (1185) to supply the turbines. Each of the companies have credit lines with the China Development Bank Corp., a state-owned lender.

“Goldwind now is actively seeking more cooperation opportunities with domestic as well as foreign wind farm developers to expand Goldwind’s presence in overseas markets,” Thomas Yao, a spokesman for the company, said in an e-mail. “Norway’s NBT AS is among the international opportunities we are currently considering.”

A spokesman for China Energine, who asked not to be named in line with company policy, said he doesn’t know about the talks and can’t comment. Officials at Sinovel couldn’t be reached.Financing ‘Feasible’

The financing arrangements are “feasible” because the Chinese turbine makers would not develop the projects themselves, said Eduardo Tabbush, an industry analyst at Bloomberg New Energy Finance in London.

“This is something we’ve seen happening more and more,” Tabbush said.

NBT envisions developing as much as 650 megawatts of wind power in Pakistan over the next few years. It already has purchased land suitable for 50 megawatts in Sindh province and is seeking a partnership with Zulfikar Ali Bhutto Institute of Science and Technology, a university in Karachi, for land for the other 100 megawatts, Alauddin said.Support Mechanism-------The country’s electricity shortfall reaches as much as 3,628 megawatts per day, according to demand-supply data available on the ministry of power and water website.

Here's an Express Tribune report on hydrocarbon production in Pakistan being flat for three years in a row:

Challenging security environment, notorious circular debt and delay in some projects due to litigation have adversely affected the country’s hydrocarbon production activities in fiscal 2011, according to a Topline Securities research note. During the outgoing year, hydrocarbon production remained almost flat, at 769,000 boepd (barrel of oil equivalent per day), for the third consecutive year despite the growing energy appetite of the country.

Contrary to the industry trend, Pakistan Oilfields (POL) on the back of its working interest in the Tal block showed a significant improvement of 39 per cent in its production while production of other major listed companies Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company (OGDC) crawled up 0.5 per cent and 3.4 per cent, respectively.

POL and PPL benefit from Tal and Naspha

POL, benefitting from its working interest in the Tal block, witnessed increase of 11.2 per cent and 39.3 per cent in oil and gas production to 4,578 (barrels per day) bpd and 86 million cubic feet per day (mmcfd), respectively.

Furthermore, PPL’s oil production propelled by a massive 48.8 per cent to 7,419 bpd on account of its working interest in both Tal and Naspha block, while the same blocks improved gas performance to cover the reduced production from other major fields including Sui, Khandkhot, Sawan and Miano.

On the other hand of the spectrum, OGDC’s oil production declined by 1.6 per cent while gas production increased by 3.4 per cent compared with last year.

Another year of depressed performance

The country’s hydrocarbon production is expected to show a mere decline of 0.6 per cent to 769,000 boepd in fiscal 2011.

However, gas production decreased by 0.6 per cent to stand at 4 bcfd while oil production show a minor increase of 0.9 per cent to 66,00 bpd.

Major culprits behind the reduced gas production are Sui (-4.4 per cent), Qadirpur (-2 per cent), Zamzama (-23.1 per cent), Sawan (-1.1 per cent), Kandkhot (-5.5 per cent) and Miano (-4.8 per cent), which contribute approximately 48 per cent to the country’s gas production. Moreover, the natural floods was another major factor behind the decline trend, says the note. The only notable increase was witnessed in Manzalai field production, up a massive 67 per cent.

Yielding the maximum from existing fields

In addition to subdued production numbers, sector exploration activity remained muted as well, says the note. However, this conservative approach will be covered if the industry yields the maximum from its existing reservoirs and fast track its few delayed projects.

Here are a few excerpts of an interesting paper on solar energy published in Scientific American:

The sun strikes every square meter of our planet with more than 1,360 watts of power. Half of that energy is absorbed by the atmosphere or reflected back into space. 700 watts of power, on average, reaches Earth’s surface. Summed across the half of the Earth that the sun is shining on, that is 89 petawatts of power. By comparison, all of human civilization uses around 15 terrawatts of power, or one six-thousandth as much. In 14 and a half seconds, the sun provides as much energy to Earth as humanity uses in a day.

The numbers are staggering and surprising. In 88 minutes, the sun provides 470 exajoules of energy, as much energy as humanity consumes in a year. In 112 hours – less than five days – it provides 36 zettajoules of energy – as much energy as is contained in all proven reserves of oil, coal, and natural gas on this planet.

If humanity could capture one tenth of one percent of the solar energy striking the earth – one part in one thousand - we would have access to six times as much energy as we consume in all forms today, with almost no greenhouse gas emissions. At the current rate of energy consumption increase – about 1 percent per year – we will not be using that much energy for another 180 years.-----------The cost of solar, in the average location in the U.S., will cross the current average retail electricity price of 12 cents per kilowatt hour in around 2020, or 9 years from now. In fact, given that retail electricity prices are currently rising by a few percent per year, prices will probably cross earlier, around 2018 for the country as a whole, and as early as 2015 for the sunniest parts of America.

10 years later, in 2030, solar electricity is likely to cost half what coal electricity does today. Solar capacity is being built out at an exponential pace already. When the prices become so much more favorable than those of alternate energy sources, that pace will only accelerate.

Here's an assessment of Pakistan's electricity crisis as published in Dawn:

Renowned Scientist and Member Science and Technology, Planning Commission of Pakistan Dr Samar Mubarakmand on Tuesday said the development of Thar coal was the only viable long-term solution to energy crisis prevailing in the country.

“Only Thar Coal can provide guaranteed long-term energy security to Pakistan,” he said while speaking at Islamabad Chamber of Commerce & Industry (ICCI).

He said that the solution to power shortage had to be found indigenously and in this regard the Thar coal was the best option.

He said the electricity generated through integrated gasification combined cycle (IGCC) plants would cost Rs7 per KWH. He said that coal could also be converted into coal gas above the ground in machines called surface gasifiers, and the efficiency of the conversion of coal gas to electricity is about 40 per cent.

Dr Samar said that Thar Coal reserves could play a pivotal role in meeting energy crises both in long term and short term which would enhance industrial competitiveness due to cost effectiveness.

He said that the industrial sector could not wait for long and the government should present quick solution to fill in the gap between demand and supply of energy

He said that the 41 per cent electricity of the world was being produced from the coal, adding that India was producing 64.6 per cent electricity from the coal, whereas Pakistan was only producing 2.27 per cent electricity from coal. He said that 95 per cent natural wealth was not being utilised, whereas not a single kg of coal was mined.

He said that the current energy crisis was causing loss of Rs230 billion and rendering 400,000 people jobless. Current dependable power supply hovers around 14,000MW in summer though it drops in the winter.

On the other hand power demand in 2030 would be more than 100,000MW, he added.

Meanwhile, Mahfooz Elahi, President ICCI said that energy was the key determinant of economic development of the country as Pakistan has been facing an unprecedented energy crisis for past few years.

The government must look towards building power plants and tap alternative energy resources for overcoming power shortage, he maintained.

ICCI President said that delay in fulfilment of export consignments has become a matter of routine due to power outages.

To meet the growing demands of energy, Government should exploit its domestic energy resources which would make the country self-reliant, he emphasised.

KARACHI: Oil and gas sector in Pakistan has seen phenomenal growth since the independence in 1947, as till now 791 wells have been drilled by various local and international exploration companies with over 250 oil and gas discoveries, official data revealed.

The data suggests that these discoveries have brought the gas reserves to 29 trillion cubic feet (TCF), whereas the crude oil recoverable reserves are estimated at 304 million barrels.

At the time of independence, the oil quantities produced were scarce and at that time there was no gas production. Over these years the petroleum industry has played a significant role in the national development by making large indigenous gas discoveries and inviting huge investments, both local and foreign, in the sector.

An investment of $810 million was spent in drilling activities with 30 new wells drilled during the last year.

After the independence of Pakistan, the government promulgated Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948 and issued rules there under in 1949.

The aim of the act was to provide regulatory certainty for exploration and production business that was essential to encourage and accelerate petroleum exploration activities.

In 1952, a well drilled on the Sui structure in Central Indus Basin, made the maiden discovery of large reserves of natural gas in the Sui Main Limestone of Early Eocene age.

The original recoverable gas reserves were estimated to be over 10 trillion cubic feet (TCF) equivalent to about one billion barrels of oil.

The discovery of Sui Gas Field was the first major milestone in the search for hydrocarbons in Pakistan.

Following the natural gas discovery at Sui, several foreign oil companies took active interest in carrying out exploration in Pakistan. This led to further exploratory drilling in prospective areas.

The government of Pakistan then decided to undertake the search for oil and gas directly and established the state oil exploration company.

The Oil and Gas Development Corporation was established in September 1961, subsequently, incorporated as a joint stock company with the listing at the local stock exchanges under the name of the Oil and Gas Development Company Limited (OGDCL).

OGDCL’s first success was the small gas discovery at Sari Singh in Sindh in 1965.

Pakistan remains an active and prospective exploration country. Significant finds continue to be made in the existing producing areas, as well as in less-explored regions.

In order to remain attractive in highly competitive global exploration market, the government has been making progressive changes in the investment polices and regulations at regular intervals. With first E&P policy of 1991, Pakistan caught the attention of international petroleum industry.

Further subsequent improvements through policies of 1993, 1994, 1997 made Pakistan an attractive location for upstream investment.

Pakistan overhauled the policy in 2001 and then in 2009. On account of combination of factors such as improved returns on investment based on new fiscal incentives, transparent and open regulatory environment, induction of market reforms and technological advances, the government expects positive influence on local upstream market and hopes that forward momentum will be maintained.

US funding of huge dam project in Pakistan angers India, according to Miami Herald:

ISLAMABAD -- Even as U.S.-Pakistani cooperation on anti-terrorism programs is withering, the United States is considering backing the construction of a giant, $12 billion dam in Pakistan that would be the largest civilian aid project the U.S. has undertaken here in decades.

Supporters of a U.S. role in the project say American participation would mend the United States' tattered image, going a long way toward quieting widespread anti-Americanism amid criticism that the U.S. lavishes money on Pakistan's military while doing little for the country's civilian population.

Approval of the project still faces many hurdles. India objects to the dam because it would be in Kashmir, an area that India also claims. The project also is likely to face opposition from Pakistan's critics in the U.S. Congress, who've called for all aid to be cut off after Osama bin Laden was found hiding in northern Pakistan earlier this year. Recent Pakistani actions, including allegations this week that Pakistan had allowed Chinese military experts to inspect the wreckage of an American stealth helicopter that crashed in the bin Laden compound, are likely to inflame such criticism.

Still, proponents of U.S. aid for the project recall that the United States was popular in Pakistan in the 1960s and '70s, when Washington backed the construction of two enormous dams, Tarbela and Mangla.

"Getting involved in a long-term project like this is very compelling for us," said a senior U.S. official who asked not to be identified because no final decision on the project has been made. "This would be a huge demonstration of our commitment to Pakistan and our faith in the country's future."

The Diamer Basha dam would provide enough power to overcome Pakistan's crippling electricity shortage. Proponents of the project also claim that its water storage capacity, in a 50-mile-long lake that would be created behind the dam, would be so great that it would have averted last's years devastating floods, which deluged a fifth of the country, pushed 20 million people out of their homes and caused an estimated $10 billion in damage.

The U.S.-Pakistani alliance since 2001 has been plagued by accusations in Washington that Islamabad is playing a "double game" by secretly supporting Afghan insurgents, while Pakistan thinks it's been bullied into acting against its own interests and that it's been unfairly blamed for American failures in Afghanistan. The unilateral American raid that killed bin Laden in May humiliated Pakistan's powerful military, causing anti-terrorism cooperation to be all but halted.

The new Pakistan Power Report from BMI forecasts that the country’s power consumption will rise from 77TWh in 2010 to 112TWh by the end of the forecast period, representing average annual growth of 3.9% in 2011-2020. After power industry usage and system losses, we see a supply surplus rising from the estimated 19TWh level seen in 2010 to 28TWh by 2020, assuming 3.9% average annual growth in power generation during the period.

Pakistan’s power generation in 2010 is put by BMI at 95.4TWh, having recovered strongly from the depressed 2009 level of 89.2TWh. BMI is forecasting an average 4.2% annual increase to 117.1TWh between 2011 and 2015. Thermal generation, comprising coal, gas and oil, is expected to increase by an average annual 2.3% during the period to 2015, but growth looks set to accelerate later in the decade.

We expect gas-fired power generation to climb 4.0% a year between 2011 and 2015, with an average annual growth rate of 4.7% forecast to 2020. Gas-fired generation should therefore reach 47.7TWh by 2015 and 62.1TWh by 2020. The share of total power generation should therefore increase from 41.1% to 44.4% by the end of the forecast period. Under the 25-year Energy Security Plan, the government is aiming for 77.8GW of new gas-fired generating capacity by 2030, representing by far the greatest area of growth for power generation. Over the longer term, conversion of older oil plants to gas should mean oil takes a smaller slice of the power pie. It currently accounts for around 30.4% of total generation, falling to a maximum of 24.5% by 2015 thanks to greater gas, hydro and nuclear expansion.

The 25-year energy security plan envisages an increase in nuclear power generation of up to 8.8GW by 2030. The plan predicts the share of nuclear power would increase to 4.2% of the country’s total energy mix. BMI suggests that 2010 nuclear power generation was 2.7TWh, rising to 2.9TWh by 2015 and to 3.2TWh by 2020. Pakistan has huge hydro-electric potential of an estimated 42GW, but currently boasts under 7GW of installed capacity. Power generated varies depending on the extent of the country’s droughts. It has been forecast that US$20bn would be needed to exploit fully hydro-power resources.

Pakistan now shares eighth place with Malaysia in BMI’s updated Power Business Environment Ratings, thanks to its relatively high level of renewables (mostly hydro) usage. Several country risk factors offset the industry strength, but the country is in a good position to keep clear of the Philippines below.

Here's an interesting excerpt from a report about Pakistan's power sector published in Miami Herald:

There is no place where the country's energy shortage isn't profound. Rural areas are without electricity for up to 16 hours a day while towns often go without for as many as 12 hours daily, forcing factories to close and plunging homes into darkness.

Natural gas supplies are rationed, with factories in the country's most populous province, Punjab, going without two days a week.

Pakistan's economic output is cut by at least 4 percent because of the shortages, the government estimates, something that hampers the country's hopes to battle extremism by creating more economic opportunities. The outages also feed political discontent, triggering frequent, if local, street protests.

Solving the energy problems is a top priority for the United States' aid program, with a State Department delegation here this week, led by Ambassador Carlos Pascual, the Obama administration's special envoy on international energy affairs.

But Pakistan's plans for a 1,700-mile natural gas pipeline from Iran, which would provide Pakistan with a cheaper source of fuel for electricity generation, is a stumbling block.-------------------Despite Pakistan's huge hydroelectric potential, it hasn't built a big dam project since the 1970s. Since the U.S.-backed government of President Asif Zardari was elected in 2008, a mushrooming chain of "circular" debt has enveloped the power sector.

The government has assumed $3.6 billion of the power industry's debt. The government-owned power grid owes another $2.5 billion to private-sector generators, even as the government, according to Finance Ministry figures, spent at least $7.4 billion on electricity subsidies during the 2008-2010 period.

Washington and international lenders such as the International Monetary Fund have repeatedly urged Pakistan to cut subsidies, which anemic government finances cannot afford.

Critics say that the government hasn't added to the electricity infrastructure in its three-and-a-half year term, while sinking billions of dollars into unproductive subsidies and taking on debt.

Of the $3.6 billion debt the government assumed, half were bills the government itself hadn't paid, said Ejaz Rafiq Qureshi, the spokesman of the Pakistan Electric Power Co., the state-owed national electricity grid. The rest is owed by private consumers.

At the end of August, a group of nine private power plants demanded that the government pay them within 30 days $540 million it owed for power generation.

Roughly half of Pakistan's current electricity output of 13,000 megawatts comes from the private generators. But there is more capacity that the government doesn't use. Government-owned equipment that could generate another 2,000 megawatts has been sidelined because of poor maintenance. Private equipment that could generate another 2,500 megawatts has been taken out of service because the government hasn't paid its bills, said Abdullah Yusuf, who represents the private producers. Combined, that amounts roughly to the entire immediate shortfall.

"If you had this capacity available, straight away your problem would be solved," said Yusuf.

A longer-term energy project is Pakistan's proposed $12 billion Diamer Basha dam, which would add 4,500 megawatts to Pakistan's electricity generating capacity. Washington is considering providing significant funding to the project. Separately, the U.S. Agency for International Development is currently working on projects that will add 900 megawatts to the Pakistani grid next year.

The United States and Pakistan reviewed progress on ongoing energy programs and recommitted themselves to pursuing practical solutions to Pakistan's energy needs during the latest Pakistan-United States Energy Dialogue this week. Ambassador Carlos Pascual, U.S. Department of State Special Envoy for International Energy Affairs, joined Pakistani Minister of Water and Power Naveed Qamar to reaffirm the partnership. They met September 14-15 in Islamabad.

"As all Pakistanis know, reliable and affordable energy is critical to Pakistan's prosperity. Without it, businesses can't operate and families can't light and cool their homes. Pakistan's future depends on power," Ambassador Pascual said at the opening of the Dialogue. "There are no quick fixes to this crisis, but the United States and international partners are willing to help. We will continue to support Pakistan in its efforts to resolve this energy crisis."

Ambassador Pascual reaffirmed the United States' long-term commitment to working with Pakistan to establish a commercially-viable and sustainable power sector. During the Dialogue, the U.S. and Pakistan reviewed ongoing cooperation in the energy sector. USAID highlighted its ongoing energy programs, which will bring more than 900 MW of power to the Pakistani grid by 2012. The programs include construction and rehabilitation of three hydropower plants (Satpara, Gomal Zam and Tarbela) and three thermal power plants (Guddu, Muzafargarh, and Jamshoro).

This extra energy will bring power to approximately 7 million people, eradicate 20 percent of Pakistan's existing power shortage, reduce annual oil imports by more than one million barrels and help store water for irrigation and flood control. The increases to the energy sector will also bring job opportunities for as many as 2.5 million heads of households.

The U.S. delegation welcomed Pakistan's plans, elaborated in the Integrated Energy Sector Recovery Report and Plan, to put the power sector on a commercially-viable and sustainable path. In the Dialogue, Pakistan underscored its commitment to strengthen energy sector governance and efficiency, pursue regulatory reforms, improve financial management, and create a business climate that helps drive investment.

Key topics of discussion at the energy dialogue included: an overview of the power sector and challenges it faces; the current policy and regulatory framework, and possible reforms; availability of primary fuels; the role of the private sector; and regional energy initiatives.

The U.S. underscored that these measures will help develop a stronger foundation for investment. Both sides agreed to continue technical exchanges in areas that can help improve power availability. The U.S. also welcomed Pakistan's continued engagement with international financial institutions and the private sector to assess feasibility of viable hydropower projects and appreciates its commitment to international environmental and societal standards, while also focusing on the importance of water management.

Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.

Here's an excerpt from The Economist on Pakistan's worsening energy crisis:

ALTHOUGH Pakistan makes international news for terrorist attacks, anti-American demonstrations and its alleged support for insurgents in Afghanistan, it is the basic inability to switch on a light that is pushing this volatile country closer to the edge. Popular anger over Pakistan’s crippling electricity shortage boiled over on to the streets this week, with riots that paralysed whole cities, unleashing running battles with the police and causing widespread damage to government offices.--------For ordinary people, the frustrations are endless. Refrigerators become useless. Water runs out because it relies on electrical pumps. Children do their homework by candlelight.

Insufficient capacity is not even the biggest problem. That is a $6 billion chain of debt, ultimately owed by the state, that is debilitating the entire energy sector. Power plants are owed money by the national grid and the grid in turn cannot get consumers (including the Pakistani government) to pay for the electricity they use. This week, the financial crunch meant that oil supply to the two biggest private power plants was halted, because the state-owned oil company had no cash to procure fuel.

The central government also continues to subsidise the cost of electricity to the tune of billions of dollars a year. That money, say the government’s critics, could be better used to pay its own bills and thereby free up unused capacity in power plants that are mothballed because of non-payment and disrepair. Cutting subsidies to people’s electricity bills, however, could lead to even more unrest. Critics argue that the government’s hand-to-mouth policymaking is self-defeating, and illustrates its general lack of planning.

In the long term, help could be at hand. Pakistan says it is about to start work on a giant dam, the $12 billion Daimer-Basha, in the far north-east, with backing from the Asian Development Bank. The dam would add a large amount of generating capacity. America may provide aid for the project. (India, which believes that the dam lies in disputed territory, in part of the former princely state of Kashmir, is inevitably against the dam’s construction.)

There are also plans for a gas pipeline from Iran, though the Americans have warned that the scheme could fall foul of their sanctions against Iran. Alternatives include access to Pakistan’s abundant untapped coal reserves, or importing gas and electricity from central Asia, across Afghanistan, a daunting proposition.

However, it is the short term that is the real problem. Unless the Pakistani government can solve its cycle of debt and disorganisation, ordinary Pakistanis will continue to vent their fury.

Here's an excerpt of a report in The Nation about an International Coal Conf in Karachi:

The international conference was told that Thar region of Sindh province is endowed with mammoth coal (lignite) reserves estimated to be 175 billion tonnes which can produce 100,000MW of electricity for next 300 years and can be a key to energy security and economic prosperity.----------“The government has started working on the policy of retrofitting 5300MW of furnace oil based power plants to coal-based initially on imported coal and then on indigenous coal when available,” he (Minister Naveed Qamar) informed the audience.-----------Removing the misconceptions about Thar coal, Dr Marcos Leontidis, mining expert from Greece, said that the stripping ratio in Thar is around 6.6: 1, which is much better than many lignite mines in the world including Greece.Dr Larry Thomas, coal expert from United Kingdom, said that sulphur content in Thar is acceptable being at 0.7%, which is lower than found in many other lignite resources already being used in the world and its moisture levels are same or even less than found in most of the lignite mines in the world. He further said the coal from Thar although may not be exportable to other countries but can be transported to be used in other parts of the province after drying.Nigel Pickett from SRK-UK in his presentation said renewable energy cannot provide Pakistan reliable energy supplies due to its seasonal and cyclic nature. It has to be part of our energy mix to meet the peak demands and reduce fossil fuel consumption. Volatility of oil prices in 2007 brought heavy stress on the economy and indigenous coal provides the only option to achieve energy security for the country.Zubair Motiwala, Chairman Sindh Board of Investment, briefed the forum about investment potential of Thar coal and said many international companies from China, South Korea, Germany, Czech Republic, Australia, UK and Turkey have shown their interest in investment in coal mining and power generation in Thar coal and also in the infrastructure projects. He also informed that the Government of Sindh is conducting 3rd International Competitive Bidding for blocks VIII, IX and X of Thar Coalfield and also blocks in Sonda and Badin for attracting international companies to develop coal mining and power generation projects in Sindh.Mohammad Younus Dagha, Provincial Secretary Coal and Energy Development Department/MD Thar Coal and Energy Board stressed the need to create an ideal energy mix by replacing imported furnace oil to indigenous coal for power generation.

The United States is a country that has received many blessings, and once upon a time you could assume that Americans would come together to take advantage of them. But you can no longer make that assumption. The country is more divided and more clogged by special interests. Now we groan to absorb even the most wondrous gifts.

A few years ago, a business genius named George P. Mitchell helped offer such a gift. As Daniel Yergin writes in “The Quest,” his gripping history of energy innovation, Mitchell fought through waves of skepticism and opposition to extract natural gas from shale. The method he and his team used to release the trapped gas, called fracking, has paid off in the most immense way. In 2000, shale gas represented just 1 percent of American natural gas supplies. Today, it is 30 percent and rising.

John Rowe, the chief executive of the utility Exelon, which derives almost all its power from nuclear plants, says that shale gas is one of the most important energy revolutions of his lifetime. It’s a cliché word, Yergin told me, but the fracking innovation is game-changing. It transforms the energy marketplace.

The U.S. now seems to possess a 100-year supply of natural gas, which is the cleanest of the fossil fuels. This cleaner, cheaper energy source is already replacing dirtier coal-fired plants. It could serve as the ideal bridge, Amy Jaffe of Rice University says, until renewable sources like wind and solar mature.

Already shale gas has produced more than half a million new jobs, not only in traditional areas like Texas but also in economically wounded places like western Pennsylvania and, soon, Ohio. If current trends continue, there are hundreds of thousands of new jobs to come.

Chemical companies rely heavily on natural gas, and the abundance of this new source has induced companies like Dow Chemical to invest in the U.S. rather than abroad. The French company Vallourec is building a $650 million plant in Youngstown, Ohio, to make steel tubes for the wells. States like Pennsylvania, Ohio and New York will reap billions in additional revenue. Consumers also benefit. Today, natural gas prices are less than half of what they were three years ago, lowering electricity prices. Meanwhile, America is less reliant on foreign suppliers.

All of this is tremendously good news, but, of course, nothing is that simple. The U.S. is polarized between “drill, baby, drill” conservatives, who seem suspicious of most regulation, and some environmentalists, who seem to regard fossil fuels as morally corrupt and imagine we can switch to wind and solar overnight.

The shale gas revolution challenges the coal industry, renders new nuclear plants uneconomic and changes the economics for the renewable energy companies, which are now much further from viability. So forces have gathered against shale gas, with predictable results.

The clashes between the industry and the environmentalists are now becoming brutal and totalistic, dehumanizing each side. Not-in-my-backyard activists are organizing to prevent exploration. Environmentalists and their publicists wax apocalyptic.

Like every energy source, fracking has its dangers. The process involves injecting large amounts of water and chemicals deep underground. If done right, this should not contaminate freshwater supplies, but rogue companies have screwed up and there have been instances of contamination.

The wells, which are sometimes beneath residential areas, are serviced by big trucks that damage the roads and alter the atmosphere in neighborhoods. A few sloppy companies could discredit the whole sector...........

Pakistan planning to purchase two nuclear power plants from China, reports The Express Tribune:

ISLAMABAD:

Pakistan has planned to purchase two nuclear power plants with a combined capacity of 2,000 megawatts from China, which will be utilised for setting up Karachi Nuclear Power Plant-2 (Kanupp-2) and Kanupp-3 and help mitigate the energy crisis.

According to documents available with The Express Tribune, China National Nuclear Corporation (CNNC) and Pakistan Atomic Energy Commission (PAEC) are likely to enter into an agreement to conduct a joint study to finalise design modifications, which would enable Pakistan to acquire two nuclear power plants, each having power generation capacity of 1,000 megawatts.

After completion of this project, a contract for establishing Kanupp-2 and Kanupp-3 will be negotiated.

The Planning Commission has said CNNC may be asked to grant intellectual property rights for the existing 1,000-megawatt plant and suggest steps which could help Pakistan avoid violation of property rights.

China has three state-owned corporations, which can own and operate nuclear power plants, including China National Nuclear Corporation (CNNC), China Guangdong Nuclear Power Holding Company (CGNPC) and China Power Investment Corporation (CPIC).

CGNPC currently operates four nuclear power plants of 3,758 megawatts in China and also involved in 16 other projects having capacity of 25,000 megawatts, which are under construction. The company’s focus has been on three-loop 1,000-megawatt plants.

The Planning Commission also questioned whether PAEC had approached the three nuclear power plant developers in order to ensure fair competition in offering the plants. “Moreover comparison of intellectual property rights of other nuclear power plant vendors may also be brought out,” the commission said.

In an attempt to increase power generation capacity, the government focuses on developing nuclear energy on a relatively bigger scale. Accordingly, the Energy Security Action Plan has envisaged increasing the share of nuclear power by installing 8,800-megawatt nuclear power plants by 2030.

The import of nuclear power plants will lead to electricity generation at cheaper rates compared to the thermal source, contributing to tackling the power crisis. About a month ago, power shortages reached their peak at around 8,000 to 8,500 megawatts, forcing long hours of outages across the country.

The load-shedding has disrupted industrial activity, denting overall economic growth of the country, which stood at 2.4 per cent last fiscal year.

July 14 (Bloomberg) -- Oil & Gas Development Co., Pakistan’s biggest fuels explorer, plans to spend a record $1 billion this year to drill 48 new wells and increase production, to help bridge the nation’s record energy deficit.

“We are following a very aggressive exploration policy,” Chief Executive Shah Mehboob Alam said in an interview at his office in Islamabad yesterday. “We are targeting a number of discoveries.”---------A “sizeable” discovery in the northwest will be announced in “a couple of days,” Alam said, without giving details.----------The company expects the Zin Block in Baluchistan to generate its first gas flows within two years. The block has estimated gas reserves of 10 trillion cubic feet and drilling is scheduled to start as soon as the government approves security plans within the next two weeks, he said.

“We drilled only five out a planned 15 wells in Baluchistan last year because of security issues,” he said. “Now, we have submitted a plan to the Finance Ministry under which the Frontier Corp. will raise a special force of 500 to 600 people.”

Baluch nationalists want political autonomy and a share of the resources in the province, where the country’s largest gas fields, including Sui, are located. The Frontier Corp. is part of Pakistan’s paramilitary force.

The company is also working in fields in western Baluchistan, including the Samandar field, west of Karachi, and Shahana, which is near the border with Iran, Alam said.

Fresh Bids

Oil & Gas will invite bids today for the development of Kunar Pasakhi Deep and Tando Allah Yar fields in the southern province of Sindh, Alam said. Previously awarded tenders had been canceled after being challenged in court for not complying with regulatory procedures.

The two fields may produce 280 million cubic feet of gas a day, 360 metric tons of liquefied petroleum gas a day and 4,300 barrels of oil a day, Alam said.

The company drilled 26 wells and made six discoveries in the year ended June 30, including at Nashpa in the northwest, which is producing 15 million cubic feet a day of gas and 4,700 barrels of oil a day, he said. Oil & Gas Development discovers fuel in one out of every 2.3 wells drilled, compared with an industry average of one in every 3.8, he said.

New Compressors

Oil & Gas Development will increase production after installing new compressors to plug leaks at the Qadirpur gas field by September, Alam said. The company plans to buy two new rigs this year.

The Qadirpur field in the southern province of Sindh contributes about 40 percent of the company’s total gas output.

Oil & Gas Development produces about 1 billion cubic feet of gas a day, or a quarter of the country’s total output. Its oil production is 60 percent of the nation’s total of 62,000 barrels a day. Pakistan imports 85 percent of its oil needs.

The company’s profit in the 12 months ended June 30, will be “higher than last year,” Alam said, without giving details. Oil & Gas reported a net profit of 55.5 billion rupees ($647 million) in the year ended June 30, 2009, according to data compiled by Bloomberg.

Nov. 15 (Bloomberg) -- Oil & Gas Development Co., Pakistan’s biggest energy explorer, expects to increase output by as much as 20 percent in the year through June after adding resources in the country’s northwest.

“New oil and gas discoveries will certainly increase our profitability,” Managing Director Basharat Mirza said yesterday in an interview in Islamabad. “I expect a 15 percent to 20 percent addition to our oil and gas production this year.”

OGDC, the largest company on the Karachi Stock Exchange, reported a gas find this week at the Nashpa-2 well in Khyber Pakhtunkhwa province. The discovery may help boost energy supplies in a country where factories are facing three days a week without gas this winter.

The company plans to spend $270 million on drilling some 27 new wells this financial year, Mirza said. It expects to produce 10 million to 12 million cubic feet of gas a day at Nashpa-2 and 5,000 barrels of oil, he said at the company’s headquarters.

An increase in domestic energy supplies may help boost South Asia’s second-biggest economy, which has been hurt by terrorism and dwindling foreign investment. Pakistan is preparing for a gas shortfall of 1.05 billion cubic feet a day by February, Petroleum Minister Asim Hussain said Nov. 13. That may exacerbate the daily power cuts that have forced textile and engineering plants to close and caused riots across the country.

Shares Slip

OGDC dropped 0.6 percent to 155.11 rupees at the close in Karachi yesterday, extending its decline this year to 9.2 percent. The benchmark KSE100 Index is little changed over the period.

As it expands in Khyber Pakhtunkhwa, the company has limited its exploration in the western province of Baluchistan, where attacks on pipelines and other energy infrastructure have disrupted gas supplies, Mirza said. OGDC has taken all “low- hanging fruit” and is left with “difficult areas that include Baluchistan and offshore blocks that require huge investment.”

The company has the protection of the Pakistan army at its Zin block in Baluchistan, where it plans to produce its first gas flows in the “next four weeks” to gather data on the reservoir, Mirza said. The block holds an estimated 10 trillion cubic feet of gas reserves, former Chief Executive Officer Shah Mehboob Alam said last year.

OGDC also expects a further 100 million cubic feet a day from a well in Tando Allah Yar in Sind province by December after completing a pipeline, according to Mirza. Further infrastructure at the field would allow an increase in output capacity to 400 million cubic feet a day, he said.

Payment Defaults

The company is pressing ahead with its investment plan even as domestic oil refineries and gas distributors fail to pay for supplies.

The company is owed about 93 billion rupees ($1.07 billion) in back payments, Mirza said, adding that “so far this default by our customers has not impacted our ability to finance our exploration. We might issue bonds or borrow from banks if this situation persists, let’s say for another year.”

Power utilities, whose earnings are sapped by unpaid customer bills and price controls, have delayed payments to fuel suppliers, which in turn owe money to the oil refiners. The total dues, known as circular debt in Pakistan, amount to more than 300 billion rupees, according to government estimates.

OGDC reported net income of 63.5 billion rupees in the year ended June 30, up 7 percent from the previous year, according to data compiled by Bloomberg.

KARACHI: The Oil and Gas Development Corporation Limited (OGDCL) operator of Nashpa Exploration License, together with its joint venture partners Pakistan Petroleum Limited (PPL) and Government Holding Private Limited (GHPL) have discovered a new hydrocarbon-bearing horizon from its appraisal well Nashpa 02, located in District Karak, Khyber Pakhtoonkhwa. The structure of well was delineated, drilled and tested utilising indigenous expertise.

Nashpa Well No 02 was drilled down to the depth of 4340 metres targeting to test the oil and gas potential of Datta, Shinawari, Samanasuk, Lumshiwal, Hangu and Lockhart formations.

Significant reserves of hydrocarbons have been found at Nashpa Well No II. The first targeted zone “Datta Sandstone” has been tested and produced 3370 barrels per day of crude oil and 11 MMCFD gas through 32/64” choke at well head flowing pressure 3800 psi.

This discovery will add to the hydrocarbon reserves base of the company and joint venture partners, bringing significant savings to the country in term of oil import bill. Testing of another four potential reservoir formations will also be undertaken wherein similar encouraging results are expected. The full flow potential of this well and the extent of the discovery will be determined after completing the testing programme.

SLAMABAD: Former Water and Power Minister Raja Pervez Asharaf on Thursday told the Supreme Court that Pakistan need an addition of 1200 MW every year as the power requirement would enhance to 1,30,000 MW by the year 2030.

Appearing before a two-Judge bench of Chief Justice Iftikhar Muhammad Chaudhry and Justice Khilji Arif Hussain on suo motu case regarding alleged corruption in setting up Rental Power Projects, he defended himself and said that Pakistan's power shortage solution was in hydel power generation and not in thermal which was costly.

"Thermal generation is not our future because we can't afford it for being too expensive," he said, adding "We need to exploit hydel and coal assets.

"The run of the river project can alone have the potential of 7,500 MW while we have 187 million tones of coal reserves in Thar."

He said that unnecessary vilification campaign had led to develop a perception of a scam and swindle that hampered the installation of power plants.

"Even harsher mudslinging and denigration was the order of the day when the government of Benazir Bhutto introduced the Independent Power Producers (IPPs) in 1994," he added.

He said resultantly the big players shied away from investing in Pakistan's power sector when fingers were pointed at them. He also referred to the application of PML-Q legislator and Housing Minister Makhdoom Fasial Saleh Hayat who had levelled charges of corruption and mismanagement in setting up RPPs.

"The concept of RPPs as a stop-gap arrangement was introduced by the previous government of which Faisal Saleh Hayat was the minister and for being the cabinet member was equally responsible if wrong policy was pursued," Raja Ashraf recalled.

Justifying why Makhdoom Hayat was chasing him, Raja Asharaf said, being PPP's secretary general he was very vocal in criticizing Makhdoom Hayat's contesting the elections on his party's ticket and then joining Musharraf's government to become a minister in dictatorial regime.

He also announced that the current power situation in Karachi, the main business hub, would end in few days as the government had developed a mechanism.

Not a single investor or unsuccessful bidder ever raised allegation that he being the minister devoured the money in the grant of license to develop RPPs, he said and brushed aside the impression that he owned a palatial house in London.

The government of Musharraf paid no heed despite repeated warnings of a looming power crisis, he said, resultantly not a single mega watt of electricity was added to the national grid that crippled our industry.

The electricity shortfall which was at 1000 MW in 2005 surged to 5000 MW in 2008 when he assumed the office of the water and power ministry, he said adding he inherited the circular debt of Rs 400 billion............

...The electricity shortfall which was at 1000 MW in 2005 surged to 5000 MW in 2008 when he assumed the office of the water and power ministry, he said adding he inherited the circular debt of Rs 400 billion.

"We had no solution to reduce the shortfall even when some fast track projects in the pipeline got delayed for over two years," he said.

He said "still we exempted our textile industry the main source of $35 billion foreign exchange earning from load shedding even during the difficult days".

The bids were invited for the commissioning of IPPs but no response came because of law and order situation even for the hydel plants.

"We are fast moving towards a different (darker) era," he feared and recalled that today Pepco was facing a shortfall of Rs 170 billion in subsidy for providing uninterrupted power supply to 6.5 million life line consumers when the total number of consumers were over 10 million.

"The World Bank had suggested us to go for long term policies instead of wasting money on subsidies and overcoming load shedding as a short term", he added.

Referring to the question why Pakistan was not developing its own power generation units, he said such investment required Rs 1.2 to 1.4 billion per MW which they could not afford.

He also compared the situation in India which was faced with 40,000 MW of shortfall, while the situation in Bangladesh was worst, Sharjah also experiencing load shedding where consumers in London were paying different tariff for each hour per day.

"Availability and affordability of power is an uphill task though it may not be true for long term projects," he added.

Meanwhile Khawaja Tariq Raheem, representing Pepco, warned that the hydel generation the production of which would dip by 1000 MW in the next decade, would be stalled from the next month because of annual canal closure.

"We would need a prompt production of 500 to 600 MW of electricity which the existing machinery could produce," he informed.

China has showered goodies on Pakistan as its top diplomat Dai Bingguo is visiting Islamabad, complains Times of India.

China has offered Pakistani companies tax free status if they operate in the border province of Xinjiang while ICBC, the Chinese bank, is working on ways to finance the Iran-Pakistan oil pipeline project.

In Islamabad, Dai appealed to world powers to support Pakistan and not desert it at this time. Pakistan has considerable influence on Afghanistan, which must be taken into consideration by those trying to resolve the crisis in Kabul, he suggested after meeting Pakistani president Asif Ali Zardari and prime minister Yousuf Raza Gilani.

The taxation move suggests China is serious about building a rail line connecting Pakistan and is preparing the economic infrastructure to support it. The new rule unveiled on Saturday offers a 5-year tax exemption to companies operating in Kashgar, which borders Pakistan and Horgos on the Chinese border with Kazakhstan.

Beijing had earlier announced to build a logistics centre in Kashgar, which saw bloody ethnic riots earlier this year, to revive the local economy and divert attention of the minority Muslim community from separatist leaders fighting to build an independent East Turkmenistan nation.

Pakistan recently announced that the Industrial and Commercial Bank of China, the largest of Chinese banks, has been appointed as the main financier in a consortium that will finance the $1.2 billion Iran-Pakistan gas pipeline. Beijing's hand is clearly visible in the decision because the project is based on the assumption of a politically stable Pakistan, which is not the case at present.

China, which has already invested $200 million to build the Gadwar port in Pakistan and helped the country build two nuclear power projects, is betting on the ability of the Zardari government to ensure stability by mending fences with the country's military leadership.

Pakistan has a multifaceted strategy to address growing energy shortages, including quick action on a pipeline from Iran, a government agency said.

Pakistani natural gas supplies fell 33 percent compared with last year. Rolling blackouts are common and the government has worked with consumers to limit consumption. Islamabad last week said it would ration natural gas to cope with the deficit.

The Pakistani Ministry of Petroleum and Natural Resources said it had a series of measures it could take to address the shortages.

"The government is implementing a multi-pronged strategy, which includes several measures such as timely completion of the Pakistan-Iran gas pipeline project to meet the growing energy deficit and, in particular, shortages in gas supplies, which constitute nearly 50 percent of the energy mix of the country," the ministry was quoted by Pakistan's News International as saying.

An economic steering committee, meanwhile, said Pakistan remained committed to a rival pipeline, the Turkmenistan-Afghanistan-Pakistan-India project.

Pakistan gets about 30 percent of its energy needs from imports, mostly from oil. The volatile commodity market is putting additional strain on the country's energy sector, officials said.

The Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited are causing a cumulative annual loss of about Rs300 billion to national economy, almost six times the losses caused by power sector, because gas shortage leads to civil unrest and affect businesses, transport and households.

The colossal loss has so far remained off the public eye because the gas shortage affects the public life only for three winter months and gas companies are paid at least 17 per cent guaranteed return on assets even if these continue to make losses. If these losses are controlled, about 700 million cubic feet of gas a day could be added to the overall supply, reducing the current shortfall by almost half.

A senior government official in the planning commission told Dawn that the transmission and distribution losses â€“ described in the official jargon as unaccounted for gas â€“ of the two utilities that went up to 13 per cent were resulting in wasteful consumption of 350 million cubic feet per day (mmcfd).

Given the fact that furnace oil is used as replacement fuel for power generation and industrial use, every million British Thermal Unit (mmbtu) costs the economy an additional burden of $20 per mmbtu, according to planning commission`s member energy Shahid Sattar. As such, the daily additional cost on import of furnace oil comes to about $7000, translating into an annual additional burden of $2.55 billion, he said.

Likewise, domestic geysers are described as gas guzzlers whose efficiency could be increased by 20 per cent by putting in a small conical baffle costing Rs500 per piece in every geyser and the efficiency could be further improved by up to 45 per cent by installing instant geysers. These two measures alone could provide another saving of 250 mmcfd, reducing import bill by $450 million or Rs40 billion in three winter months.

In comparison, the transmission and distribution losses of Wapda`s power companies currently stand at about 22 per cent which translates into an annual loss of about Rs60 billion. The official said the power losses at about 10-12 per cent were globally acceptable compared with 2-3 per cent losses in the gas distribution system.

SNGPL Managing Director Arif Hamid says his company`s system loss stood at 11.7 per cent in October 2011 which was scaled down to 11.4 per cent in November. He is of the view that six per cent gas losses are globally acceptable.

Ogra, in consultation with gas companies, had set a target of reducing system losses to 4.5 per cent by financial year 2010-11 when actual losses stood at about seven per cent and have since been increasing.

The planning commission official said that Ogra had successfully brought down gas distribution losses to 4.5 per cent through mandatory one per cent loss reduction every year until 2008 but the previous Ogra chairman appointed on political grounds, and then sacked on orders of the Islamabad High Court and then the Supreme Court of Pakistan, raised these benchmarks to about 11 per cent.----------This additional cost estimated at over Rs70 billion over the past four years has not only created an additional demand of about 500 mmcfd but has also translated into gas tariff as expenditure incurred by the companies because the two utilities are guaranteed 17 per cent and 17.5 per cent return on assets under international covenants with the World Bank.------------The economic value multiplies manifold in view of the fact the supply is already short of demand by about 50 per cent in winter months. Giving an example, the official said a private domestic fertiliser plant was generating an annual revenue of about Rs15 billion by consuming only 35 mmcfd of gas. Its ultimate contribution to agriculture, employment generation and the national economy was manifold and not included in these estimates, the official said.

Gas crisis in Pakistan will subside by 2013 claims Federal Minister of Petroleum and Natural Resources, according to News Pakistan:

Thursday, January 12, 2012: The Federal Minister of Petroleum and Natural Resources, Dr Asim Hussain, has painted a rosy picture for Gas crisis in Pakistan. The minister during the inauguration of Kunar-Pasakhigas field in Tandojam claimed that by the end of 2013, Gas shortfall in the country will subside.

Asim declared that a total of 2.6 billion cubic feet of gas will be pumped up into the system; the promised increase will include 1,058 million cubic feet per day of gas produced locally and over 1.5 bcf of imported gas from projectswhich are yet to materialise.

Kunar-Pasakhi gas field, which was inaugurated by by Prime Minister Yousaf Raza Gilani at Sui Southern Gas Company office in Deh Bukhari, Hyderabad, has a production capacity of 100 mmcfd.

The cost of project is estimated to be Rs1.49 billion. The SSGC and Sui Northern Gas Company Limited will share 50 mmcfd each from the supply. The inflow of 50 mmcfd gas will ease shortage in Punjab, which has been struck the hardest.

The Prime Minister of Pakistan at the inauguration said, “We inherited an energy crisis when we came to power but we will ensure that the next governments do not face the same. Pakistan is endowed with all kinds of natural resources;the need is to harness them at the right time.”

The Kunar-Pasakhi field was discovered some eight years ago but work was delayed due to lawsuits. According to Azeem Iqbal Siddiqui, SSGC Managing Director, the project will benefit up to 2.5 million consumers and produce 387 tonsof liquefied petroleum gas (LPG) and 400 tons of liquefied natural gas (LNG).

The natural resources minister said the present government will give a plan of action for five and ten years for energy production. According to him, current projects under development in Sindh and Balochistan will contribute over1,058 mmcfd in the next two years. He expects another 1 bcf from Iran over the next year besides LNG import of 500 mmcfd.

Toby Dalton, Director, Carnegie Endowment for International Peace, said here on Monday evening that the economic future of Pakistan was interlinked with its energy future, according to The News:

He made the observation at a roundtable discussion on ‘Political Future of Pakistan and International Community’ at a local hotel. The roundtable discussion was organised under the auspices of Centre for Peace, Security and Development.

Carnegie Endowment for International Peace, he said, was a global think tank. “We think the dynamism that exists in Pakistan on its own terms, not in US terms,” he said.

“We understand issues such as circular debt, CNG issue and other issues being faced by Pakistan,” Dalton said.

The real issue was how Pakistan formed political consensus, how different political parties were brought together, he said.

“The fundamental problem is to bring confidence to bring investment,” he said.

“Energy is fundamental to the future, just as economy is fundamental to the future,” he emphasized.

George Perkovich, Vice President Studies, Carnegie Endowment for International Peace said Turkey was a very interesting example for growth. It was an ongoing struggle but there was so much interest to invest in Turkey, he said. Once such an environment was achieved, “the international community can come and augment,” he said.

He said we understand that many interesting things were going on in Pakistan.

He said the United States and other Western countries clearly want Pakistan to be peaceful.

“The sense of justice is very important in Pakistan and in any society,” he said. “To address injustices we need to involve the whole world,” he said.

He, however, made it clear that to bring about justice was “messy” and takes a long time but without it there could be no stability.

“We will be looking to see how Pakistan addresses these issues “internally” that were no doubt challenging, he said.

Perkovich agreed that there was growing awareness that whatever happened during the last 60 years doesn’t work and lessons needs to be learnt. Pakistan itself has these issues and “economic dynamism is the key,” he remarked.

In Afghanistan too, he said, the US was trying to bring some sort of stability. Responding to a question Perkovich said he understands Memogate but it was not the US government that should be held responsible for it.

Information Minister Shazia Marri said, “Whatever went wrong in Pakistan is not only because of Pakistanis.”

“Pakistan is not only an important country in the region; it is important in the world,” she observed.

“We need you to understand what our passions are,” she said. “Remedies need to come from friends who influence us,” she said.

“All democracies have gone through experiences,” Marri said. “We are in the learning process; probably in a more challenging way,” she said.

“We are a younger democracy which is flourishing,” Marri said. “We were gifted the world’s most terrible dictator. He had no right to rule our three generations,” she made the remark referring to military ruler Gen Ayub Khan.

“Then there was Zia who brought Kalashnikov culture,” Marri said.

“We have hardly four years of democracy,” she said. “Our children want to respect others, but it’s a two-way thing,” she said.

Faisal Siddiqui, leader of Muthahida Qaumi Movement (MQM) said extremism was not only an issue in Pakistan; it was a global issue.....

Excerpts from The Nation story on $513 million ADB loan for water and power projects in Pakistan:

Pakistan and Asian Development Bank (ADB) has singed two loan agreements worth of $513.24 million that included $270 million for the tranche-2 of the Punjab Irrigated Agriculture Investment Programme (PIAIP) and $243.24 million for tranche-3 of the Power Transmission Enhancement Investment Programme.

Secretary Irrigation Department Punjab and Country Director Asian Development Bank in Pakistan have signed the first agreement of "Punjab Irrigated Agriculture Investment Programme (PIAIP) Tranche-II". This agreement aims at sustainable improved delivery of services for irrigated agriculture and better water management in Punjab. The project aims to provide reliable irrigation supplies to the Lower Chenab Canal Command area.

According to the agreement this project would include construction of a new barrage complex to be located approximately 275 meters downstream of the exiting Khanki Headwork on the river Chenab, which new barrage complex shall include a main weir and under sluice; gats and hosting arrangements; and operating deck and access road bridge. Construction of a canal head regulator adjacent to the new barrage and a lead channel to the existing lower Chenab canal and the dismantling of the existing Khanki Headwork and provision of implementation support to the project executing agency for construction supervision and management expenses of PMO barrage. The project is expected to be completed by the 30th June 2016. Secretary Economic Affairs Division and Country Director Asian Development Bank in Pakistan singed the second agreement Power Transmission Enhancement Investment Programme tracnhe-III.

This agreement targets to enhance the efficiency of the overall power transmission system and to provide an adequate and reliable power supply to a greater number of commercial, industrial and residential consumers. The projects shall comprise following, a new 600km 500 KV transmission line from Jahmshoro to Moro, Daudu and Rahim Yar Khan, a new 500 KV grid stations a Moro and expansion/ augmentation of 3 existing 500 KV grid stations at Jamshoro. Dadu and Rahim Yar Khan. A new 125 KM 220 KV transmission line from UCH-II power plant to the 220-grid station at Sibbi, and a connection between the UCH-I and UCH-II power plants. A new 200 KV grid station at Mansehra and procurement of transmission system equipment. This project is expected to be completed by 31st December 2015.

Here's a report in The News about $10 billion Chinese investment in energy projects in Pakistan:

China’s state-owned Three Gorges Corp. plans to invest $10 billion by 2018 in Pakistan’s energy sector and a delegation is scheduled to visit Pakistan on February 7, officials said on Friday.

The Hong Kong-based United Energy Group Limited of China also intends to establish a 2,000 megawatts power project in Sindh as their delegation is also visiting Pakistan next month to hold further talks on setting up the power projects, they said.

Sindh Coal and Energy Department has signed memorandums of understating (MoU) with the two companies, which have shown interest in developing coal-fired power plants in Thar and Badin coal fields, as well, the officials said.

In an attempt to resolve the issue, the government is pinning hopes on Thar Underground Coal Gasification (UCG) pilot project, which contains the country’s largest coal deposits of around 850 trillion cubic feet spanning over 3,800 square miles, they said.

Overall, according to the World Energy Council, Pakistan has slightly more than 2,000 million tons of proven recoverable coal reserves.

Pakistan’s current electricity demand is around 25,000 megawatts per day, but the current electrical production is less than 20,000 megawatts per day, leaving a deficit of slightly more than 5,000 megawatts, and by 2015, domestic demand is projected to rise to 30,000 megawatts per day.

Currently, the country depends on oil and natural gas to generate up to 60 percent of its electricity needs, further impacting the country’s balance of payments as the price of oil rises and the ongoing power shortages are beginning to impact the country’s bottom-line exports, the officials said.

Member of the Science and Technology Planning Commission, Dr Samar Mubarakmand, has said that Thar coal project would be beneficial for common people and free from all defects.

The success of the Thar coal project would lead to investment from leading international companies, he said.

With the completion of coal-fired power generation project, the nation would get cheap and sufficient power supply, which would resolve the current energy crisis, he added.

Mubarakmand said that the country had enough coal reserves through which it could daily produce 50-60 million cubic feet gasifier, which would end gas shortage from the country.

It is for the first time that the coal gasification is being launched on commercial basis, which will help in abundant and cheap electricity.

India said Monday it may use its own currency, the rupee, to pay for oil imports from Iran in the face of a US-led sanctions campaign aimed at forcing Tehran to abandon its nuclear programme.

India has said it will continue to import oil from Iran, joining China in refusing to bow to intensifying US pressure not to do business with Iran.

India currently routes its dollar payments for Iranian crude through a Turkish bank -- an avenue that might be closed off as Washington ratchets up pressure on the Persian Gulf state.

"There are different (payment) options which are being evaluated and discussed. We are also considering the rupee as an option," Reserve Bank of India Deputy Governor H.R. Khan told reporters.

Indian officials say the country could pay partly for its Iranian oil imports in rupees that Iran could then use to buy Indian goods.

However, they say Iranian imports of Indian goods would not cover New Delhi's entire oil purchase bill.

India pays Iran about $1 billion every month through Turkey for the 370,000 barrels a day of crude oil it buys from the world's fourth-largest oil producer.

Khan said as of now there had been no disruption in the current payment arrangement.

But the Press Trust of India quoted a senior government official as saying there were indications from Turkey's state-run Halkbank that it would have to stop settling payments on behalf of Indian companies.

An Indian delegation visited Tehran earlier this month to discuss payment options.

India's Finance Minister Pranab Mukherjee told reporters in Chicago on the weekend that New Delhi would not scale down its petroleum imports from Iran despite US and European sanctions against the Islamic republic.

"We will not decrease imports from Iran," Mukherjee was quoted as saying by the Press Trust of India at the end of a two-day visit aimed at wooing US investment.

"Iran is an important country for India despite US and European sanctions on Iran.

"It is not possible for India to take any decision to reduce imports from Iran drastically."

The West fears Iran is trying to build a nuclear bomb. Tehran insists its nuclear programme is only for civilian use and refuses to abandon its uranium enrichment activities.

Pakistan & Iran agree to build transnational power grid, according to Bloomberg:

Iran and Pakistan agreed to invest $718 million in a network for transmitting electricity from Iran to its eastern neighbor, Tehran Times reported, citing Energy Minister Majid Namjou.

Iran sells about 35 megawatts a day to Pakistan, and the two countries want to boost supply to as much as 4,000 megawatts, the Tehran-based newspaper said. The Persian Gulf country’s power exports will reach a total of some $1 billion in the current Iranian year ending March 19, Deputy Energy Minister Mohammad Behzad said, according to the report.

Here's an interesting idea proposed by BioNitrogen Inc, a Florida start-up, to make inexpensive fertilizer in South Asia:

In what may become a precursor of things to come in the Urea Fertilizer Industry, local fertilizer manufacturing plants in Pakistan were forced to shut last year for over six months. These shutdowns resulted in critical shortages of fertilizer which subsequently sent the costs of fertilizer rising one-hundred forty one (141) per cent in just 2 years. Industry officials sighted the country's gas load management plan as a key component of the shutdowns. The urea production shutdowns were the result of natural gas shortages which severely hampered the manufacturing of urea thus dealing a severe blow to Country's Agriculture Sector which many believe is the backbone of the entire economy.(2) In neighboring India, there are discussions that Urea prices will be linked directly to gas prices which would increase pressure on the farmers of India to maintain economic stability in the face of rising fertilizer prices.(3)

Industry data and global production data charts for nitrogen based urea fertilizer, often correlate the price of nitrogen fertilizers is directly related to the price of natural gas (methane).(4) (5) Manufacturing one (1) ton of anhydrous ammonia fertilizer requires 33,500 cubic feet of natural gas. In other words, natural gas is used to produce fertilizer which is used to grow crops. This relationship also has a direct impact on not just the agriculture economies of the world, but also the production of wheat, the main food staple in many countries throughout the world, which also plays a strong role in producing the feed for millions of livestock in not just Pakistan but Countries around the world.

What interests Dr. Terry R. Collins, the CEO of BioNitrogen, is the news accounts coming out of Pakistan often state for the record "It is a matter of fact that there is no alternative of gas for urea manufacturers as urea manufacturing process cannot be completed without gas supply." Dr. Collins offers this perspective, "There is in fact a viable alternative to using natural gas to produce to nitrogen based urea. BioNitrogen has developed a patent-pending process which specializes in the conversion of renewable agricultural waste biomass into urea fertilizer. Our small-format production facilities are designed for implementation in local farm communities, close to their required feedstock and abundant biomass."

Adds Dr. Mario Beruvides, BioNitrogen's CTO, "BioNitrogen is excited about introducing ourselves to the world as an extremely cost-effective and ecologically friendly alternative for producing extremely high quality nitrogen based urea fertilizer. If Pakistan were using our production methods and facilities, there likely would have been no closures in their country and no economic impact. This is part of BioNitrogen's corporate mandates of not only producing urea fertilizer, but we're absolutely committed to protecting the environment and contributing to local economic development while helping to feed to our planet."

As he continued to reflect on the events in India and Pakistan, Dr. Collins concluded, "Compared to traditional urea manufacturing facilities that use natural gas as a feedstock, our BioNitrogen plants will be much smaller and can be constructed and brought online for production much more quickly. ...

“This is a humble contribution of WAPDA to reduce the gap between demand and supply of electricity,” he said.

Work on high capacity hydroelectricity projects is in full swing. He said the feasibility study and detailed engineering and design of 7,100 MW Bunji project in Gilgit Baltistan has been completed and is currently under review of WAPDA experts.

He said feasibility study of Dasu Dam in Khyber Pakhtunkwa has been completed. This dam he added would store 1.15 million acres of water and produce 4320 MW hydro electricity. “Consultants for preparation of detailed design and tender documents have been mobilized,” he added.

“Hydroelectric power projects having the potential to recover cost in short time are darlings of world donor agencies,” he said. Finances for such projects are available with much ease than other power projects.

There are 17 run of the river power generation sites that have been identified by WAPDA experts and work on the feasibility studies on most of them have been initiated.

These include some high power potential projects like 2100 MW Tungas, 2800 MW Yulbo at Sakurdu, 2800 MW Thakott at Besham and 2800 Patan at Patan.

He expressed confidence that the speed of work at Neelum Jehlum Hydroelectric Project would accelerate as the high tech tunnel boring machines have arrived at site. He said this would help WAPDA to complete the 969 MW power project on schedule in 2016.

Durrani said the 496 MW Lower Spat Gah; 665 MW Lower Palas Valley; and 600 MW Mahl; run of the river projects would be completed under Public Private Partnership. He hoped that the private sector would come forwards to grab this lucrative opportunity.

Chairman Water and Power Development Authority hoped that resources for 896 MW Tarbela (extension) and 1401 MW Munda Dam would be soon mobilized. Munda with a storage capacity of 1.3 million acres feet (MAF) would also act as buffer against floods in Khyber Pakhtumkhwa.

He said Mangla raising would add 2.88 MAF of water in the reservoirs. He said 34 MAF additional water storage would be available after completion of Munda Dam, Dasu Dam, Gomasl Zam Dam and Satpara Dam. He said Diamer Basha and Khurram Tungi Dam - both of which are ready for construction would add 9.3 MAF in water reservoirs.

He said the current water storage capacity in the country is 11.91 MAF after depletion of 4.37 MAF due to silting in the existing dams.

Business Recorder reported that the government will launch Interconnection of Thar Coal based 1200 MW Engro Power Plant with National Transmission & Despatch Company system' project at a cost of PKR 22.04 billion with the objective of providing consistent power supply to industrial, agricultural, commercial and domestic consumers.

The cost includes PKR 14.845 billion Foreign Exchange Component and PKR 7.19 local component. The project is likely to be financed by Japan International Cooperation Agency or through Irish Credit Bureau on buyer's credit basis and sponsored by the NTDC.

The location of the project is District Matiari, Sindh and it is aimed at providing adequate facilities for reliable and stable transmission of electrical power, keeping in view the growing demand of domestic, commercial, industrial and agricultural customers of Discos.

The project would disperse bulk power from 1200 MW Engro Power at Thar to up country by constructing 500kv D/C transmission lines, 250 kilometers long from the power plant at Thar to Matiari with extension at existing 500 KV grid station of Matiari.

Thar Coal Energy Board has been established to promote and facilitate the public and private sector coal industry. Thar coal deposits have been rapidly recognized as a major energy resource with the potential to transform the energy equations in the country. Therefore, initially the intent is to develop Thar coal mine for generation of electricity from two 1200 MW Power Plants one by Engro in private sector and another in public sector by PEPCO.

Ministry of Water and Power had decided in a meeting of Thar Coal Energy Board that NTDC would immediately prepare a work plan for providing the inter connection arrangements for dispersal of power of these power plants.

According to the document the NTDC has planned a transmission scheme for evacuation of power from 1200 MW Engro Power Plant with the following scope: considering that the proposed third 500 KV Jamshoro Moro RY.

Khan Transmission Line and 850 MW Wind Power plant is constructed before its completion. A MoU between PEPCO and Sindh Engro Coal Mining Company for detailed feasibility study had been signed.

Sindh Engro Coal Mining Company has carried out detailed feasibility study for coal mining for both power plants. The expected date of completion of the coal mining project is December 2015 while the two Thar coal based power plants of 1200 MW each is 2015 to 2016.

According to official sources, High Voltage Direct Current transmission lines will be required for evacuation of additional generation at Thar in the year 2015 to 2016 and onward as well as the power generated from the proposed power plant.

They said that in case future generation at Thar does not mature during the next two years while AES imported coal power plant and 1000 MW import of power from Iran does mature then 525km single circuit AC transmission line from Matiari to RY Khan would be required in future for the dispersal of this power.

Here's a Reuters report on award of engg contract by Pakistan to a German-Austrian firm for Iran-Pakistan Gas Pipeline:

BERLIN – ILF Consulting Engineers, a German-Austrian company, confirmed on Monday that it is providing “advice and planning” work in the technological development of an Iranian-Pakistan pipeline project.

The German-Austrian involvement may violate US and EU sanctions barring the supply of technology to the Islamic Republic.

“Advisory and planning engineers” are working on the project, Rüdiger Ophoven, a spokesman for ILF’s gas and oil department, told The Jerusalem Post on Monday. He stressed that ILF is only involved in the Pakistani side of the project.

The Pakistan paper The Nation reported on Sunday that “according to the secretary of petroleum, Pakistan has offered $250 million to a German company, ILF Engineering, for laying the gas pipeline inside its territory.

The gas pipeline would be completed till 2014, the secretary added.”

Iran’s Persian- and English-language press reported extensively on the pipeline project and Germany’s role in its development.

When asked about the value of ILF’s contract, Ophoven told the Post that such a project is “less than 10 million euros.”

He said he did not know if ILF’s legal department had examined whether the deal violated US, UN or EU sanctions.

The United States pressed Pakistan in 2009 to refrain from entering into a pipeline agreement with Iran. However, the Pakistani government moved forward with its Iranian partners.

Austria and Germany are considered by experts in Europe to be the weakest links in the enforcement of the sanctions regime targeting Iran. Germany remains Iran’s most important EU trade partner, with an annual bilateral trade of roughly 4 billion euros.

Ophoven could not confirm or deny whether German regulators had approved the deal with Pakistan.

Nasrin Amirsedghi, a leading German-Iranian intellectual and a close follower of trade relations with Tehran, told the Post on Monday that chief executive officers of companies look “for a way to circumvent” the sanctions.

She criticized ILF’s explanation that it has a contract only with Pakistan.

“Do we want to prevent an atomic catastrophe in the Middle East? Do we want to support Israel and the Iranian people? Then all European and Western governments should end their diplomatic, cultural and scientific relations with Iran — the cancer of terrorism and war in the region,” Amirsedghi said.

She added that by severing relations with the Islamic Republic, the “sanctions will have an effect.”

Ophoven told the Post that the project entails a “1.5- to 2-year phase,” and there may be additional phases. ILF is providing the Pakistanis with “state-of-the-art technology” that deals with the know-how to build the pipeline project, he said.

Food production requires water and energy, the extraction of water requires energy, and energy production requires water. Food prices are highly sensitive to energy costs – which indirectly affect the GDP of a country as high costs of processing, irrigation, fertiliser and transportation affect production and lead to lower exports.

This nexus poses a challenge to governments and population. The lack of energy security, lower agriculture yields and higher cost of relief goods is leading us towards unrest and uncertainty. This threatens our masses, our government and our business as 70 % of our country’s production is dependent on our agricultural sector.

Hunger and poverty are on the rise while we remain clueless about the future. Our reservoirs need to be secure and more dams need to be constructed faster, as draught and famine are fast turning into a possibility.

Agriculture, in Pakistan or elsewhere, consumes more than 70% of global water demand. For example, countries that produce meat require up to 20,000 litres of water for every kilogramme of meat produced, compared to at least 1,200 litres to produce a kilogram of grain. We do not realise the need for secure water resources due to illiteracy and lack of community awareness.

Climate change, in the shape of torrential rains, has also affected our country; we are one of the few countries facing a chronic food emergency today.

Economists forecast that global demand for energy will increase by 40% by 2030, and that this energy will draw heavily on freshwater resources. Over 75% of global demand for energy from 2012-2030, will be dependant on fossil fuels – predominantly coal. The Thar coal reserves need to be developed rapidly, as this is the only way to ensure job security, resource mobilisation, income and prosperity for the population. It makes good business sense for leaders to work on this. Furthermore, we have to ensure fast-tracked building of dams between now and 2015, a failure to do so may lead us to bankruptcy, as people will lose faith in the nation’s ability to sustain itself and business will suffer colossal damages.

We need good business and we need to understand the difference between dependency on others and self reliance. Bad governance is a major issue in Pakistan, eating up business and politics and leading us to ruins. Pakistan faces risks ahead as its next big war will not be over power or money – it will be over food, water or energy. All are vital as we struggle to survive. For Pakistan, failure is not an option.

With Pakistan having awarded some 47 exploration licences to various oil and gas exploration companies from 2007 up to last year 2011, a total of 38 new oil and gas reservoirs have been unearthed that helped boost the country's combined oil and gas production to 4,165 million cubic feet per day (MMcfd) from the previous 3,973 MMcfd.

Quoting unnamed sources from the Ministry of Petroleum and Natural Resources, the Associated Press of Pakistan reported a to tal of 102 wells have been drilled up in various parts of the country in the last four years.

The same sources said Pakistan may expect additional boost once the expected 800 Mmcfd gas from local reservoirs is added in the system by August or September this year.

The Petroleum Policy in 2009, which extended incentives to oil and gas exploration companies in Pakistan, proved to be a much effective tool to entice as well as enable achieve self-sufficiency in the sector.

The policy has undergone a number of changes and revisions, but in principle, the Policy for 2012 would help further attract more local and foreign investment in Pakistan's oil and gas sector, the Council of Common Interests told the Associated Press of Pakistan. The federal government is expected to announce soon the Policy for 2012.

The Pakistan government is also working on establishing a number of pipeline construction projects to support its growing energy demand, including the Iran-Pakistan ( IP ) gas pipeline and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects.

"Work on the IP gas pipeline project is at a fairly advanced stage. Under the project, Pakistan will construct approximately 800 km pipeline from Iran-Pakistan border to Nawabshah. The venture has entered into the implementation phase and work on Front End Engineering and Design, Feasibility and Detailed Route Survey has already been started. It is scheduled to be completed by June 2012," sources said.

Invitations for bids to construct the pipeline will be made after survey completion.

The IP gas pipeline project is a 56-inch diameter development that covers 1,931 kilometres starting from Iran's South Pars gas field. The project implementation and construction is targeted in four years, with the first gas flow available by end December 2014, the Associated Press of Pakistan reported. The expected 750 mmcfd gas volume production will help generate 4,000 MW electricity, as well as provide job opportunities in backward areas of Baluchistan and Sindh.

With the $ 7.6 billion TAPI gas pipeline project, meanwhile, the first gas flow is expected in 2016, where Pakistan will receive 1,325 Mmcfd of gas, double to that of the IP project.

Khattan oil would be more valuable to the railway now than it was formerly. As fuel it was worth not more than 1½ times in weight to Khost coal and so could not possibly compete, but it was mainly as a possible substitute for pitch, the agglomerate used in fuel briquette manufacture, that it is to be now considered. Borings were also commenced in 1891 at Pir Koh near Spintangi, but were abandoned after they had reached a depth of 560 feet as no signs of petroleum were discovered. Gypsum occurs in considerable quantities near Khattan and Tung near Spintangi.

Another detailed, modern, scientific seismic survey was conducted in the mid-1990s, which proved the presence of tremendous gas and oil deposits across Balochistan, including the Marri Bugti areas, near the Quetta Zargoon belt. There are proven big gas fields, very good quality and at a large scale, explored near Barkhan at Jandran in the 1970s, and only require to be linked to the Dera Ghazi Khan pipeline. Oil also has been found at Kingari District Loralai and it needs to be pumped out. In Dera Bugti near Sui three more gas fields with very big deposits; all three estimated to hold about ten trillion cubic meters, have been explored very recently. According to reports, all proven explored gas is estimated to be about 20 trillion cubic meters, whereas Pakistan requires 700 million cubic feet and is clamouring to get it from Tajikistan, Turkmenistan, Iran or Qatar.

It is also reported that the cost of imported gas either from Central Asia, Iran or Qatar would be double of local available gas in Balochistan. The important point worthy of attention in any case is that if a pipeline is built to import gas from Central Asia, Iran or Qatar, it has to cross Balochistan. Now the question is, why is the local Balochistan oil and gas not extracted to meet Pakistan’s life and death energy crisis?------------The reports observe that this security assessment about shifting trends in the insurgency comes with the warning that the “unthinkable situation” may worsen, which could further aggravate if the political leadership does not wake up to the situation. One high security official in the briefing realises, “Balochistan is no longer a local issue. It has acquired the international limelight.” Now the main question is, whose is the policy failure in Balochistan, politicians or the use of force? If at all the political leadership wakes up to the situation today, what options are left to them? Recently, moderate pro-federation, former chief minister Sardar Ataullah Mengal said that the Baloch are pushed to a position of no return. In this background, the basic question under discussion is how to cope with the energy crisis. In any case, exploration of local Balochistan resources or the pipeline have to be laid across thousand of miles of the Baloch land.

Here's an Express Tribune report about Russia's interest in financing and building Iran-Pakistan gas pipeline after Chinese reportedly pulled out:

As a Chinese bank has backed off from financing the $1.5 billion Iran-Pakistan gas pipeline project amid pressure from the United States, Russia has caught the attention of Pakistan, which is planning to explore this viable option first.

The decision to negotiate a deal with Russia came in a recent meeting of the sub-committee formed by the Economic Coordination Committee (ECC) of the cabinet.

Earlier, Russia had offered Pakistan that it would fully finance the pipeline if its energy giant Gazprom was awarded the contract without bidding during a four-day visit of Foreign Minister Hina Rabbani Khar to Moscow in February. In order to give its assent to the offer, the government will have to waive Public Procurement Regulatory Authority (PPRA) rules – designed to ensure transparency in government dealings.

“A delegation will visit Russia soon to negotiate a deal with Gazprom,” Petroleum Secretary Ijaz Chaudhry told The Express Tribune. Recently, he said, the ECC sub-committee had considered different options for going ahead with the vital gas pipeline project.

“No decision, however, has been taken yet to award the contract to Russia, but Pakistan will discuss this option,” he clarified.

Chaudhry also dispelled perception that the Industrial and Commercial Bank of China (ICBC) had distanced itself from the project and said “we have written a letter to ICBC, asking it to clear its position as financial adviser to the project.”

The Inter-state Gas Systems (ISGS) had signed a deal with financial advisers for raising funds for the project, except for ICBC which was in the process of taking approvals.

“It is apprehended that a probable reason for not signing the agreement could be geo-political situation in the region,” said a summary tabled before ECC.

Earlier, the sub-committee had considered approaching China and Russia to seek financial assistance for the project. However, Russia now appeared to be leading the race, a ministry official said, adding the committee also studied the Iranian offer of $250 million for constructing the pipeline....

India company prepared to sell gas to pipeline, according to Economic Times:

After fuel, India is offering to export natural gas to Pakistan to help the neighbouring country tide over its gas crisis.

State-owned GAIL's just commissioned natural gas pipeline from west coast to Bhatinda in Punjab is barely 25-km away from Pakistan border and the gas utility is proposing that the line can be extended to Lahore in no time, sources privy to the development said.

GAIL plans to import liquefied natural gas or LNG (natural gas that has been liquefied at sub-zero temperature and shipped in cryogenic vessels) at Dahej or Hazira import terminals in Gujarat. It plans to move this gas through the Dahej-Vijaipur-Dadri-Bawana-Nangal-Bhatinda pipeline to Punjab and then into Pakistan.

However, before a formal proposal is made to the Pakistani side, it needs the blessing of the ministry of external affairs, sources said.

Pakistan may experience its worst gas crisis in 2016 when shortfall is expected to hit 3.021 billion cubic feet per day as supply-demand position deteriorates, the State Bank of Pakistan had said in December last year.

Unlike India, Pakistan has till now not built a LNG import terminal and so buying gas from GAIL pipeline may make economic sense for the Islamic nation. Gas supply in Pakistan at around 5.497 bcfd in the year to June 30, 2012 is short of demand by 2.458 bcfd. Supplies, according to the State Bank of Pakistan, are likely to increase to 6.354 bcfd in 2015-16 but the deficit will expand further to 3.021 bcfd.

Sources said a LNG terminal will take a minimum of four years to build while the GAIL pipeline can be expanded into Lahore within months.

Arif Allaudin, who heads the Alternate Energy Development Board, would like to see more of that help coming from renewable sources, saying there was a 2.4 million megawatt potential for solar energy alone in Pakistan.

Niaz Ahmed Kathia, director of private company Alternate Energy Systems, said abundant and free sunshine was the answer to Pakistan's energy woes.

"Energy is our biggest issue, more than terrorism, and if we replace our one million tubewell pumps with solar ones, we can save 7,000 megawatts," Kathia told AFP at the demonstration of a solar well in the capital.

The majority of Pakistan's tubewell pumps, which pump out underground water, run on the strained national grid or on diesel power.

There is no pretence that solar power is the only answer, but this month the prime minister ordered the government to provide solar electricity in remote villages far from the national grid.

The government described renewable energy as the "investor's choice" and said the private sector has offered to produce 1,500 megawatts a day.

In the mountains of Kashmir there is no gas pipeline and in the cold winter months electricity bills are prohibitively expensive.

In Azam's hometown of Muzaffarabad, the capital of Pakistani-controlled Kashmir, solar panels light up a public park and mosques.

Solar street lights are also being installed slowly in cities such as Rawalpindi, Lahore and Karachi.

Pakistan's first on-grid solar power station, capable of producing 178.9 kilowatts, began test operations in Islamabad this month with a grant of $5.4 million from the Japan International Cooperation Agency.

"It is a seed for thousands more solar power plants," Senator Rukhsana Zuberi, a former chairperson of the Pakistan Engineering Council told AFP.

This winter Pakistan suffered a two billion cubic feet a day shortage of natural gas -- usually the mainstay of millions delivered to homes and industry via pipelines -- sparking protests and forcing factories to lay off labourers.

The trouble is remedial plans are only at an embryonic stage.

"We plan to promote the use of solar geysers as the gas shortage is becoming acute," petroleum and natural resources minister Asim Hussain said.

"The gas companies would install solar water heaters at consumer premises and deduct the amount in installments in the gas bills," he added.

Power generated during sunlight hours can be stored in deep cycle lead acid batteries to power lights, radios, televisions and fans at night.

Norwegian company Telenor says it has set up 50 solar-powered cell sites, mostly in remote areas, capable of reducing 2.5 tonnes of carbon dioxide per site by saving over 940 litres of diesel a month.

Traders say demand has certainly risen. A 170-litre (37-gallon) capacity solar geyser starts from 27,000 rupees ($300) and a 218-litre version for 32,000 rupees as a one-time cost.

"Solar geysers can reduce gas bills considerably. The technology is not only environment friendly but also pocket friendly," said vendor Shakil Ahmed.

Here's a News story of how the worst-hit Punjab industries are switching to alternate power and gas generation:

The Punjab industries are converting on alternative energy due to uninterrupted power and gas outages of six to eights hours daily, besides improving their efficiency to reduce costs and stay competitive domestically and internationally, analysts said on Tuesday.

“We are unable to compete with similar industries in other provinces that enjoy full gas supplies and lower electricity load-shedding, said Syed Nabeel Hashmi, Chairman Punjab Economic Forum.

The majority of industries are suffering from power and gas load-shedding, but some have managed to reduce the operating cost through improvement in their efficiencies.The manufacturing sector in Punjab is now using biomass (agricultural waste), solid municipal waste, coal gasifiers, liquefied petroleum gas (LPG), used tyres, rejected leather soles as alternative fuels to gas, furnace oil and diesel, he said.

In addition, Punjab industries have upgraded technology and their human resource to improve productivity, said Hashmi.Gohar Ejaz, group leader All Pakistan Textile Mills Association, said, “We would never have realised the quantum of savings that could be made through energy audits.”

German non-government organisation GIZ and Small and Medium Enterprises Authority (SMEDA) have facilitated APTMA member mills by providing free services of highly qualified foreign energy audit and management system experts, he said, adding that only through energy audit and the resultant cost-free changes in the manufacturing system 25 APTMA members gained a cumulative benefit of Rs258 million per annum.

The benefits doubled for those mills that agreed to make some minor investments, he said, adding that savings made through improvement in efficiencies did provide some relief to the mills when they used alternative energy resources.

Lahore Chamber of Commerce and Industry (LCCI) Senior Vice President Kashif Yunus Mehr, who is associated with the steel melting industry, said that larger steel melting units have imported coal gasifiers from China.

The gas produced is use to heat the furnaces, he said.“It costs 20 percent higher than the natural gas as it was the only alternative to keep the industry running as natural gas is mostly unavailable.”

These gasifiers require investment of Rs25 million that mills with small capacities cannot afford, he said, adding that the small steel melting units are using locally-fabricated small gasifiers that are highly inefficient, but serve the purpose of keeping the production intact.

Among the larger corporate sector, Nishat Group has established a 12MW biomass and solid municipal waste-run power plant at its textile processing unit in Lahore, he said.To cut its cost, it is recovering the caustic soda used in its processing mills by installing a recovery plant at its water treatment facility, said Mehr.

At its cement factory in Kalar Kahar, it is using solid municipal waste, used tyres, rubber chappals, rice husk, wheat straw, corn cob, as fuel for heating purposes.“We are not using power supplied by the Pakistan Electric Power Company (PEPCO) in most of the manufacturing facilities of our group,” said Nishat Group Chairman Mian Mohammud Mansha.

Engineering sector entrepreneur Almas Hyder said, “Unfortunately our industrial sector grew initially on protection that gave rise to huge inefficiencies.”By improving efficiencies the increase in cost of production could be absorbed to a large extent, he said.

Pakistan Council of Renewable Energy Technologies (PCRET) will install 368 Biogas plants in different rural areas by the June 2012 under the project “Development and Promotion of Biogas Technology for meeting domestic fuel needs of rural areas and production of Biocfertilizer”. This project was launched in 2008 through which 2500 family size Biogas plants are to be installed in the country, out of these 2132 plants have been installed and the remaining will be installed by end of financial year 2011-12.

Biogas plant is a device used for converting fermentable organic matter, particularly cattle dung, into a combustible gas (Biogas) and fully matured and enriched organic fertilizer. A typical biogas plant consists of a digester where the anaerobic fermentation takes place, a gasholder for collecting the biogas, the input-output units for feeding the influent and storing the effluent respectively, and a gas distribution system.

Giving further details, Deputy Director PCRET, Sarfraz Khattak said as per livestock census 2000, there are 46.69 million of animals (Buffaloes, Cows, Bullocks) in Pakistan. In the year 2002-03, the domestic live stock population was estimated at 23.3 million cattle, 24.8 million buffalo, 24.6 million sheep and 52.8 million goats.

He said on the average, the daily dung dropping of a medium size animal is estimated at 10 Kg/per day. This would yield a total of 466.9 million Kg dung per day. Assuming 50% collectability, the availability of fresh dung comes to be 233.45 million Kg/ per day. Thus, 11.67 Million M3 biogas per day can be produced through biocmethanation, he maintained.

Since 0.4 M3 gas could suffice the cooking needs of a person per day, therefore 11.67 million M3 of biogas could meet the cooking needs of 29.2 million peoples. The total population of Pakistan is about 170 million, out of which 70% reside in the rural areas.

“We can meet about 30% cooking requirements of the rural masses from this source of energy (biogas) alone. Besides, producing 33.52 million Kg of biocfertilizer per day or 18.6 million tons of biocfertilizer per year, which is an essential requirement for sustaining the fertility of agricultural lands”, said Sarfraz Khattak. Giving details, Deputy Director PCRET said average family in Pakistan consists upon 5-7 members.

Officials from Pakistan’s petroleum ministry will travel to Russia early next month for talks with Gazprom OAO (GAZP) as the South Asian country seeks financial and technical help to revive a stalled gas pipeline from Iran.

Pakistan is exploring different options and a visit by technical experts to Russia is part of those efforts, Abdul Basit, a spokesman for Pakistan’s foreign ministry, told reporters in Islamabad today. The nation is struggling to finance the $1.3 billion pipeline, already delayed by a decade, in the face of sanctions over Iran’s nuclear program.

New sources are crucial to Pakistan’s attempts at easing its worst energy crisis as power blackouts for as long as 18 hours a day in major cities crimp economic growth and trigger street protests against Prime Minister Yousuf Raza Gilani’s government. The $175 billion economy grew 2.4 percent in the year through June 2011, one of the smallest expansions in a decade, according to official data.

The ministry of finance on March 13 said a consortium of Industrial and Commercial Bank of China and Pakistan’s Habib Bank Ltd. (HBL) is showing “less interest” in the pipeline project. The country may impose a tax on consumers, or seek government- to-government arrangements with Iran, China and Russia to build the pipeline, the ministry said the same day.Alternative Project

Pakistan is responsible for completion of the pipeline by 2014, a deadline agreed by the two countries in 2010 after political and security concerns delayed the project. Under the agreement, Iran will provide about 21.5 million cubic meters of gas a day to Pakistan for 25 years. The deal can be extended by five years and volume may rise to 30 million cubic meters a day.

U.S. President Barack Obama has publicly supported an alternative gas pipeline project, from Turkmenistan to Afghanistan, Pakistan and India, that would bypass Iran. The U.S. and its allies have tightened sanctions against Iran saying the Islamic Republic’s nuclear program is a cover to make weapons, while the Persian Gulf country has said it is only for peaceful civilian purposes.

Pakistan’s gas shortfall is forecast to reach 2.22 billion cubic feet a day in the fiscal year that began July 1, according to government data. The pipeline will carry gas from the South Pars field via Baluchistan province in southwest Pakistan to an off-take point in Nawabshah. South Pars, which extends from Qatar’s North Field, is the largest known gas deposit in the world.

Here's a News report on increase in oil and gas production in Pakistan:

According to Pakistan Petroleum Information Services (PPIS), Pakistan’s gas production has increased to 4,339mmcfd by March from 4,011mmcfd in June 2011. Similarly, oil production has jumped to 72,411bpd in March from 65,659bpd in June 2011.

The Oil and Gas Development Company Limited (OGDCL) is leading the industry volume growth as a renewed focus of management on early development of fields and success on appraisal drillings, which led to a strong 12-13 percent volumetric growth.

A key positive surprise in the fiscal year stems from production recovery on Pakistan Petroleum Limited (PPL) operated Sui field as production jumped by five percent in the second quarter, defying previous trend of four to five percent decline in productionand prospect of 100mmcfd of gas volume addition on Kadanwari in which OGDCL stake is 50 percent, with initial 30-40mmcfd already hooked up.

Fawad Khan, an analyst at KASB Securities, said that the regulatory issues post-introduction of 18th Amendment, poor law and order situation in selected areas and backlog of incomplete wells have restricted the drilling activity.

All exploration activities are concentrated in the onshore area, he said, adding that year to date, the E&P sector has drilled 14 exploration and 24 development wells against the fiscal year targets of 31 exploration and 45 development wells.

Unlike previous years, foreign E&P companies have contributed heavily to the exploration activities with the United Energy, which acquired BP Pakistan assets last year, drilling six exploration wells in the year so far.

A successful drilling in high-profile well at Zin, though results are below expectation, finds in Hilani near Tal Block by Mari Gas and successful development drillings in Sui are noteworthy events.

However, appraisal activity has slowed down. Results of Nashpa III and Makori East II, which were earlier targeted in the third quarter, have now slipped into fourth quarter due to reconfiguration of the target depth.

Similarly, the start of appraisal drilling in Maramzai and Mamikhel, both in Tal Block, earlier scheduled for the third quarter is now likely in the fourth quarter.

Ambassador of Japan to Pakistan Hiroshi Oe on Sunday said "National Transmission Lines and Grid Stations Strengthening Project" of Japan worth Rs30 billion, will help Pakistan save electricity used in about 2 million average households.

In an interview with APP, he said Pak-Japan project, soon after its completion, will help Pakistan in overcoming its growing energy demand.

About the major projects initiated by the Japan government, he said that Japan has been a major contributor to the development of social sectors in Pakistan.

Japan's assistance to Pakistan has added up to 1.3 trillion yen (approx. 1.5 trillion rupees) since 1954, the ambassador said.

Japan has provided technical assistance to Pakistan by receiving trainees under the Colombo Plan and provided technical training or study opportunities to over five thousand Pakistanis in Japan, he added.

He said Japan has built up about 530 schools and 130 hospitals, clinics and provided medical equipment under various Japanese assistance programmes.

To a question, he said about 30 Japanese companies are operating in Pakistan including joint ventures with Pakistani companies related to automobiles, motorcycles and service industries such as constructors, IPPs, financial institutions and trading houses.

Considering the vast potentials in Pak-Japan bilateral relationship, he said there is much more work to be done, and therefore, he cannot be complacent about the current status of ties.

Highlighting the need to enhance the potential of manpower in Japan for Pakistani youth, he said trade opportunities with Japan must expand and interactions with Japan will surely provide vast opportunities to the youth of Pakistan.

To a question, he said Pakistan is an important partner in the area of parliamentarians' exchanges.

Both the countries have Japan-Pakistan friendship groups respectively, consisting of parliamentarians from each country, working to enhance their regular interactions.

In September 2011, when the Japanese Parliamentary League for Polio Eradication visited Pakistan, they discussed the need for promoting interactions between parliamentarians of the two countries during their meeting with Pakistani parliamentarians, he said.

The ambassador expressed his determination to make utmost efforts to further strengthen bilateral relations between the two countries, focusing on the promotion of parliamentarians' exchanges of our two countries.

About the Pak-Japan cultural ties, Hiroshi Oe said Japan Embassy holds cultural events such as Ikebana workshop and demonstration, children's art and speech competition and Japan film festival throughout the year across the Pakistan.

The ambassador said JICA has been helping National Institute of Science and Technological Education (NISTE) to train science teachers who will surely play a vital role in utilizing Japanese technology in Pakistan in the future.

He said that he visited Sialkot last year and found the world's top-class manufacturing industries there. He hoped that with proper quality control and marketing, Pakistan will develop even more industries of such standard.

The year 2012 is the 60th anniversary of the establishment of the diplomatic relations between Japan and Pakistan,the Ambassador added.

Hiroshi Oe emphasized on promoting human and cultural exchanges to deepen mutual understanding between the two countries and expressed wish to work with the Pakistani government to further deepen the bilateral cooperative relations.

Diamandis starts off his talk with some fast-cut clips of “crisis! Death! Disaster!” he’s collected from the last six months. The news media, he says, preferentially presents us with negative stories, because that’s what we pay attention to. And there’s a reason for that: since nothing is more important than survival, the first stop for all this awful information is the amygdala, the human early warning detection system that looks out for things that might harm us. In other words, we’re hard-wired to pay attention to the negative, dark side.

“So it’s no wonder that we’re pessimistic. it’s no wonder that people think the world is getting worse.” But Diamandis didn’t co-found Singularity University on a mere whim. From here, he swings into his more usual, optimistic mode: “We have the potential in the next three decades to create a world of abundance [the theme of Diamandis' recent book.] I’m not saying we don’t have our set of problems; we surely do,” he says. “As humans we’re far better at seeing the problems way in advance. Ultimately, we knock them down.”

Diamandis runs through some stats from the last century to show how things have improved for humankind. And he outlines some of the extraordinary advances made, particularly within the technological realm. After all: ”The rate at which technology is getting faster is itself getting faster.” And based on the likes of Moore’s Law ride some incredibly powerful technologies, not least robotics, 3D printing, artificial intelligence and nanomaterials.

Now, some stories:

Energy

Napoleon III once invited the King of Siam to dinner. Napoleon’s troops ate with silver utensils; Napoleon ate with gold utensils; the King of Siam used aluminum utensils–precisely because at that time, aluminum was the most valuable metal on the planet. It was only with electrolysis that the metal became cheap. Similar moves are happening in energy in our current times; solar energy, for instance, is now 50% of the cost of diesel in India.

Water

We talk about water wars. And yet we fight over 0.5% of the water on the planet. Diamandis talks of Dean Kamen’s Slingshot device, which can generate 100 liters clean water from any source. Coca Cola is apparently going to test this in the field soon–with a view to deploying it globally. Given how much water that company consumes, this is a big deal. Or, as Diamandis puts it, “this is the kind of innovation empowered by this technology that exists today.”

Health

Diamandis talks of the recently-announced Qualcomm Tricorder X Prize, challenging teams to incorporate medical diagnostic tools into a mobile device. “Imagine this device in the middle of the developing world,” he says, starrily. What of the potential of someone swabbing an unrecognized disease, calling it into the CDC and preventing a pandemic? Heady stuff.

Population

“The biggest protection against the population explosion is making the world educated and healthy,” says Diamandis, detailing that 5 billion people will be connected online by 2020. “What will these people want and desire?” And why wouldn’t that cause an economic injection rather than an economic shutdown? Why won’t they be healthier through the use of the Tricorder, better educated because of the likes of Khan Academy or using 3d printing to be more productive than ever before?

Talks between Pakistan and Qatar over the price for liquefied natural gas (LNG) have reached a deadlock as the latter is stuck to its stance and is not ready to supply gas at less than $18 per million British thermal units (mmbtu).

“Qatar has refused to export LNG below the price of $18 per mmbtu,” said a senior official of the Ministry of Petroleum and Natural Resources who is familiar with the developments.

Pointing to the reason, he said global LNG demand had surged and prices had increased following shutdown of nuclear power plants in Japan.

In comparison, gas import from Iran will cost $11 per mmbtu while gas supply through Turkmenistan-Afghanistan-Pakistan-India pipeline will cost $13 per mmbtu.

“Following Qatar’s reluctance to show flexibility, Petroleum Minister Dr Asim Hussain will visit Malaysia to discuss the possibility of LNG import,” the official said.

Last month, a government delegation went to Qatar to finalise a price for the import of LNG on government-to-government contract. Pakistan and Qatar have already signed a memorandum of understanding (MoU) in this regard.

According to the MoU, Pakistan will import 500 million cubic feet of LNG per day (mmcfd) which will be utilised to generate 2,500 megawatts of electricity.

Earlier, in a meeting of Pak-Qatar Joint Ministerial Commission held in the last week of February in Islamabad, Qatar sought a price of $18 per mmbtu, but Pakistani authorities believed that Doha would show flexibility in its stance later. Qatar also sent a term sheet seeking $18 per mmbtu for LNG.------------Private sector importers have already sought $18 per mmbtu for LNG supply, but this has invited a lot of criticism from different quarters. Even the Oil and Gas Regulatory Authority (Ogra) has opposed this high price and called for discussing the matter in the Economic Coordination Committee (ECC). Buyers of gas, including power companies, have also rejected such a high rate.

According to sources, the petroleum ministry has prepared a summary for the ECC which will discuss initiation of an integrated LNG import project. They say the government will furnish guarantees and receive gas from the parties qualified through a bidding process.

This is what private LNG importers had desired. Under this plan, imported LNG will be injected into pipelines of gas distributors – Sui Northern Gas Pipelines and Sui Southern Gas Company – and the government will take a weighted average price of gas.

As a result, the ministry official said, prices of domestic gas are expected to rise to $9 per mmbtu against existing $4.5 per mmbtu, which will affect all categories of consumers.

“The price of furnace oil is equal to $20 per mmbtu, therefore, LNG price of $18 per mmbtu is affordable for the industry,” an official said but added the industry, which was getting local gas at cheaper rates, was not ready to buy expensive LNG.

Pakistan has over 50 trillion cubic feet of shale gas, according to US Energy Information Admin. The US companies have the technology and the funds to extract it profitably.

Under the new policy, exploration companies will be offered 40-50% higher prices for the extracted gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009. Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price. As an added incentive, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.

Even with the higher prices for the tight gas offered to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.50/Btu for the gas compared with $11-18/Btu for gas imports, according to a report by Platts.

Pakistan should ask US to help extract shale gas in exchange for abandoning the Iran-Pakistan gas pipeline.

Here are some details of Pakistan segment of proposed Iran-Pak gas pipeline as published in Dawn:

Here the reported cost of the pipeline is $700m for 900km of the 56-inch-diameter pipeline. Perhaps this figure is wrong but we need to get the full details from our Iranian friends and work out what we can do including the possibility that we acquire the required pipe from the Iranian Ahwaz Rolling Mill, which presumably provided the pipe for the Iranian IGAT 7.

Of the other pipelines the one I have studied most closely is the Dolphin Project’s construction of the 48-inch-diameter pipeline connecting over 244km from the gas-receiving plant in Taweelah to the Fujairah power and desalination plant.

This successfully completed project was awarded to Stroytransgaz — a Russian company — in 2008 at $418m or roughly $ 1.73m per kilometre. At that time, steel prices were at an all-time high and Dolphin or Stroytransgaz contracted to buy 120,000 tons of pipe from Mannesman in Germany for more than $200m. Since then, steel prices have halved.

According to the Steelonthenet.com website billet prices that were above $1,000 a ton in 2008 now stand at just about $500.One assumes therefore that the cost of material would be about half of what had to be paid in 2008. Were we building a 48-inch-diameter pipeline we would have needed to use by Dolphin standard some 400,000 tons of pipe but since ours is a 42-inch-diameter pipeline the requirement would be reduced to about 320,000 tons and would cost, even if we went to the expensive Mannesman source, about $300m. (I have seen a news item that our interstate pipeline company has invited expressions of interest for the supply of 335,000 tons of pipe which is roughly in line with my calculation).

Compressor stations will be needed and I have not been able to determine how many will be needed and what they will cost but a perusal of the literature would suggest that for the amount of gas involved we may need three or four compressor stations with a total 100,000 horsepower. These should not in my view cost more than $50-75m.

As regard other costs an American study suggests that in America in 2007 pipeline costs were roughly divided between labour (35 per cent), material (35 per cent) and the balance as miscellaneous of which right-of-way costs were about eight to nine per cent.

They projected that material costs would decline but labour and right-of-way and other miscellaneous costs would rise.Material costs have, as stated, declined. This, however, is the only factor, which is common to Pakistan and the US. The other costs are much lower in Pakistan. The Balochistan government has granted right of way for free, and the cost of the skilled welder in Pakistan is about 10-15 per cent of the cost of welders in the US.

Our design and other miscellaneous expenses have to be much more modest since the current designed path of the pipeline, running parallel to the coastal highway will create few environmental concerns and require culverts or other major tasks other than the crossing of the Indus.

Perhaps this is wrong and experts should indicate what their evaluation is but to my mind in Pakistan the cost of material will be about 50 per cent of the total cost of our pipeline. That means our 780km pipeline should cost about $700m to $800m and no more. It is an amount that the government can easily cough up from its own resources if it diverts the gas surcharge towards this end, and the problems of finding foreign financing need not arise.

Turning now to the question of paying for the pipe that I presume we would import from Iran if Ahwaz Rolling mills has the capacity, I believe we have to see greater use of imagination and innovation. To start with, we must work out a mechanism whereby our payment is made in rupees used by the Iranians to pay for what they import from Pakistan. What can this be?...

Here are some excerpts of a News interview with Pak industrialist Mian Mansha:

Q: Do you think the decisions taken at recent energy summit would resolve the power and gas crisis? Is it the most burning issue impacting Pakistan’s productivity?

Mansha: Short-term decisions are no solution to a problem that requires long term planning. The government could save a trillion rupees if the power plants using furnace oil were run on coal.

In fact about a year back I proposed to the government to allow me to convert Nishat group furnace oil power plants to coal. The investment plan and revenue sharing formula to cover the cost was also outlined. I regret that things have not moved painfully slow on this proposal of vital national importance. Converting these plants to coal would wipe out entire circular debt in a year and generate resources for alternate energy and hydroelectric projects.

Q: How do you propose to reform the power sector?

Mansha: The deteriorating fuel mix is increasing the base cost. We are producing over 50 percent of power using the most expensive furnace oil as fuel. The losses and theft in electricity distribution are alarmingly high at 35 percent. The public sector power projects are operating a very low efficiency. Sensible solution to the crisis is to privatise and deregulate this sector.

The power distribution companies should emulate KESC that ensures most productive use of electricity by exempting industries from load shedding.

Q: You are pioneer in alternative energy projects, are they feasible?

Mansha: We have been seeking cheaper energy solution. Our cement plant first shifted to coal from furnace oil and then to biomass and municipal solid waste that were even cheaper alternatives.

Pakistan is blessed with large quantity of biomass that has a potential to produce 6000 MW of electricity. Our companies are using corncob, rice husk, wheat straw, cotton plant sticks and other agriculture residue, solid municipal waste, slippers, sandals, and used tyres to generate energy.

India — India has long struggled to provide enough electricity to light its homes and power its industry around the clock. In recent years, the government and private sector sought to change that by building scores of new power plants.

But that campaign is now running into difficulties because the country cannot get enough fuel — principally coal — to run the plants. Clumsy policies, poor management and environmental concerns have hampered the country’s efforts to dig up fuel fast enough to keep up with its growing need for power.

A complex system of subsidies and price controls has limited investment, particularly in resources like coal and natural gas. It has also created anomalies, like retail electricity prices that are lower than the cost of producing power, which lead to big losses at state-owned utilities. An unsettled debate about how much of its forests India should turn over to mining has also limited coal production.

The power sector’s problems have substantially contributed to a second year of slowing economic growth in India, to an estimated 7 percent this year, from nearly 10 percent in 2010. Businesses report that more frequent blackouts have forced them to lower production and spend significantly more on diesel fuel to run backup generators.

The slowdown is palpable at Sowmya Industries, a small company that makes metal shutters that hold wet concrete in place while it solidifies into columns and beams, a crucial tool for the construction industry.

The company, located outside this city on the southeast coast of India, is struggling with several issues, including a 20 percent increase in the price of raw materials and falling orders.

But Sowmya’s manager, R. Narasimha Murthy, said the lack of reliable power was an even bigger problem. His company loses three hours of power every evening. And all day on Wednesdays and Saturdays — euphemistically called “power holidays” — it receives only enough electricity to turn on the lights but not enough to use its large metal-cutting machines. -------------A major problem is the anemic production of coal, which provides 55 percent of India’s electricity. Coal production increased just 1 percent last year while power plant capacity jumped 11 percent. Some electricity producers have been importing coal, but that option has become more untenable recently because India’s biggest supplier, Indonesia, has doubled coal prices. ------------For many businesses, the power shortage has become debilitating.

In the southern state of Tamil Nadu, Srihari Balakrishnan, a textile factory owner, said he goes through 6,300 gallons of diesel fuel on an average day to keep his operation running, spending $3,000 more than he would if power were available around the clock.

“We are not able to use 20 to 30 percent of our capacity,” he said. “We can’t use grid power for two full days of the week. When we have power, we have a six-hour cut,” he added, using an Indian term for blackouts. ----------Other companies are also stuck. Reliance Power, controlled by the investor Anil Ambani, says it has stopped construction on a large electricity plant nearby because it can no longer afford to buy coal from Indonesia as planned.

Here's a Gulf News story on Pakistan's plan to import power from neighbors:

Dubai: Talks with India and Iran on power exports are under way and likely to be settled soon, Pakistan's Minister for Water and Power Syed Naveed Qamar, told Gulf News.

Iran currently provides 72 megawatts to Pakistan which is likely to be increased to 1,100MW.

"It is our desire that the modalities, tariff and terms and conditions may be finalised at the earliest so that the project can be started soon."

He said the transmission line between Pakistan and India is around 100 kilometres compared with the Kyrgyz Republic and Tajikistan transmission lines which are around 1,000km.

"As we look into the future, the power demand is going to be robust coupled with the growth in the economy. The electricity trade with India is beneficial for both countries and it will open new avenues of economic ties," Qamar said.

Pakistan may import up to 500MW which may be supplied with the construction of small transmission lines from both sides.

Wind projects

He said that the major share of power production is through oil which is expensive, and therefore the government is considering running the power plants on coal. Special attention would be given to the power sector and in this regard more funds would be allocated for the power sector during the coming development budget.

The government has plans to produce 1,000MW of cheaper power from wind projects next year, Qamar said.

"Russia, Uzbekistan and Turkmenistan have also offered Pakistan to export their surplus power to Pakistan," A.U. Rahman, acting executive director of Central Asia, South Asia (CASA-1000) project, told Gulf News.

He said Russia is also keen to join the project.

Pakistan has an installed capacity of around 20,000MW, but the production capacity is around 16,000MW. Right now "the shortage of power is around 4,500MW," Rahman said.

He said the current load shedding will be "reduced gradually" with the new projects expected to come online soon.

In certain parts of the country current load shedding continues for more than 12 hours.

Here's an excerpt from The Economist magazine on Pakistan's energy crisis:

SUMMER in the plains of Pakistan is excruciating enough without the added joy of 20 hours of power cuts a day. Earlier this month protesters in several towns in Punjab, Pakistan’s wealthiest province, smashed windscreens, blocked motorways, shut down markets and set fire to the offices of parliamentarians and an electric utility. They clashed with police who brought out handcuffs and tear gas and fired live rounds in the air.

It was a reaction to electricity shortages that had plunged parts of the province into darkness and scorching heat. At one point the gap between supply and demand hit 7,500 megawatts (MW), or nearly 40% of national demand.

Under the current government, the power sector has neared the top of a list of security, political and foreign-policy problems that includes some heavyweight contenders. Last week’s confluence of events once again underlined how easily Pakistan’s power sector can slip into collapse. The system’s many weaknesses find it all too easy to conspire. Cool weather in the north meant a reduced flow of hydroelectricity. Demand shot up as summer temperatures further south soared into the forties and air-conditioners strained to keep pace.

Meanwhile, several private power producers had to halt or slash production because the state-run power purchasing company hadn’t paid them. They had not been able, because the biggest consumers (especially provincial and federal governments) had not paid their own electricity bills. The bills that were paid are not enough to cover the cost of generation.

This so-called “circular debt”, currently about $880m, is an ongoing problem. The government usually bites the bullet, as it did this time, by paying off a portion when power producers are about to sue for default, enabling them to start generating again—for the moment. What remain unaddressed are the structural issues that cause the debt to pile up again: poor recovery of dues (receivables stand at $4 billion), electricity theft, transmission losses, reliance on imported oil and politically sensitive subsidies for certain groups. Perpetuating all of this is a lack of efficiency and co-ordination across a maze of state-owned agencies including a power purchaser, distribution and generation companies, a regulator and various ministries. The gap between the effective cost of generation and payments received is estimated at $12 billion over the past four years.

Chinese EXIM Bank, after a long delay, has now approved $450 million loan to finance 969MW Neelum Jhelum hydropower project, which would add about 5.15 billion units of cheap electricity to the national grid every year by 2016.Well-placed official sources informed TheNation that Chinese EXIM Bank after a long delay has now approved $450 million loan to finance the Neelum Jhelum hydropower project located near Muzaffarabad adding that the Economic Affair Division (EAD) has also gotten an approval from the Chinese bank in this regard. They told that the Neelum-Jhelum hydropower project needed $700 million foreign funding to complete the project by 2016. The major financiers of the project include the Kuwait Fund, the Export Import Bank of China, the government of the UAE and the Saudi Fund for Development. Sources further told that project had originally been budgeted to cost Rs130 billion, but costs had witnessed skyrocketed rise by 154per cent to Rs330 billion. In the revised plan submitted by the water and power ministry, the main reason for the spike in costs was attributed to a change in design, but a detailed examination of the figures has shown that primary cause for the increase was delay in completion. Sources further told that more than 30per cent of the work on the project had been completed. The project would earn about Rs45 billion in revenues annually and would therefore be able to recover its cost of construction within seven years.It is also learnt that as the Chinese EXIM bank found hesitant to release the worthy amount since 2009 resultantly the delay for unknown reasons had caused the cost of the project to rise to Rs330 billion ($3.7 billion). It was also feared that the pace of construction might slowdown providing an edge to India, which had been building Kishanganga project on the same Neelum River on its side of Kashmir because if Pakistan failed to complete its project before India, then it might lose the water rights to the upper riparian country. Further, according to Indus Water Treaty (IWT), the country that first completes its project on Neelum tributary will have the priority rights on the water of Neelum River. Furthermore, the Neelum Jhelum Hydropower Project Company (NJHPC), a wholly owned subsidiary of the Water and Power Development Authority was set up to manage this very project.It is to be noted here that the top man of China had committed this loan during the visit of President Asif Ali Zardari to Beijing in 2009 but the Chinese Exim bank did not entrain Pakistan although three years have elapsed since the commitment of China to Pakistan resultantly the country was in contact with Islamic Development Bank, Saudi Development Bank, Abu Dhabi Fund, Kuwait Fund for the required finding. Even IDB had committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government was pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.Waqar Masood Secretary Economic Affairs Division while confirming the information pertaining the receiving of approval worth of $450 million loan to help finance the 969-megawatt Neelum Jhelum hydropower project. He also informed that documentation process in this regard would take one month while disbursement of such a hefty amount is likely within one-month....

Here's World Bank economist's assessment of Pak competitiveness, according to The News:

Pakistan needs to improve its competitiveness for rapid industrialisation, which offers it a range of potential benefits, including more jobs creation, tax revenues and economic growth, said Dan Biller, World Bank’s lead economist on South Asia Region for Sustainable Development.

Addressing businessmen in Lahore, he said that the GDP growth of Pakistan in 2011 was only 24 percent, while China grew at 9.2 percent, India 7.8 percent, Sri Lanka at eight percent, Indonesia 6.4 percent and Malaysia 5.2 percent.

Among all these countries, Pakistan has the largest agricultural share of GDP and smallest industrial share, he said.

Biller said that lower industrialisation in Pakistan against other regional countries is due to its lower competitiveness, adding that Pakistan ranks poorly on the Global Competitive Index of the World Economic Forum. Pakistan’s institutions are weak, scoring 3.4 points out of 10, he said, adding that Malaysia score 5.2 points, China 4.3 points, India 3.8 points, Indonesia 3.8 points and Sri Lanka scored 4.2 points on quality of institutions.

Similarly, he said, Pakistan’s score was the lowest among these countries in macroeconomic stability, health and primary education, higher education and training, goods market efficiency and labour market efficiency. Only in the market size, Pakistan had a better score than Sri Lanka, he added.

He also said that Pakistan has the most expensive and least-efficient port systems in the region, adding that the handling charges at the Karachi Port Trust are $110 per ton. India charges $80 per ton, Sri Lanka $150 per ton and Hong Kong charged $140 per ton. Ship charges of 2,800 tons are $30,000 at KPT, $5,500 in Sri Lanka, $6,000 in Hong Kong and $25,000 in the Indian port.

He said Pakistan handles 55 containers per hour, Sri Lanka 70 per hour, Hong Kong 100 per hour and India 65 per hour. The Customs authorities in Pakistan examine 10 percent containers physically; Sri Lanka and Hong Kong less than five percent, while physical examination of containers in India is also high, but less than 100 percent, he said, adding that Pakistani ports lack water depth, which is 10.5 feet at KPT, 13 feet in Sri Lanka, 14 feet in Hong Kong and 12 feet in Indian ports.

The World Bank economist said that Pakistan provides relatively low access to services that impeded foreign investment. Pakistan has two fixed telephone lines per 100 people against 22 in China, 2.9 in India, 17.2 in Sri Lanka, 15.8 in Indonesia and 16.1 in Malaysia.

Around 99.4 percent of the population in China has access to electricity; it is 66.3 percent in India, 76.6 percent in Sri Lanka, 62.4 percent in Pakistan, 64.5 percent in Indonesia and 99.4 percent in Malaysia, he added.

The roads and power generation are number one infrastructure concern for the businesses worldwide, Biller said, and advised Pakistan to reduce the transport cost that is critical to competitiveness.

In addition, the state should ensure safe mobility and enhance regional connectivity. Pakistan’s foreign market access potential is at least 4.5 times higher than the United States, he said, adding that its current market access is only 4-9 percent of the United States.

Pakistan’s market share in total global exports is less than half percent and remained stagnant since 2000. India, on the other hand, increased its global export share from 0.6 percent in 2000 to 1.5 percent in 2010, he added.

Following the signing of an agreement with the government of Pakistan for providing $840 million for the 1,410-megawatt Tarbela 4th Extension Project, the World Bank has also agreed to extend financial assistance to the 4,320MW Dasu Hydropower Project.

It has also been agreed that the project will be constructed in phases after work on the 4,500MW Diamer-Bhasha Dam is initiated and its financial plan is finalised.

Water and Power Development Authority (Wapda) Chairman Shakil Durrani stated this while presiding over a meeting here at the Wapda House to discuss the report submitted by an international panel of experts.

Addressing the meeting, the Wapda chairman said international financial institutions were taking keen interest in providing funds for Wapda projects due to excellent ‘economic internal rate of return’ (EIRR) of these schemes.

The Dasu project is part of the least-cost energy production plan of Wapda aimed at harnessing the country’s hydropower resources to improve the share of hydroelectricity in energy mix.

The project will be constructed on the Indus River, seven km upstream of Dasu village and 74 km downstream of Diamer-Bhasha Dam. The project is situated on the Karakoram Highway, about 350 km from Islamabad.

According to a statement issued by Wapda, the priority is to construct Diamer-Bhasha Dam for which land acquisition process has already started and 13 contracts for offices, colonies and roads have been awarded.

Dasu Hydropower Project will follow the initiation of work on Diamer-Bhasha Dam. Detailed engineering design, for which the World Bank is providing funds, and tender documents are likely to be completed in early 2013. Afterwards, construction work will commence.

The project will generate 21.3 billion units of electricity per annum and will also have positive impact on existing hydropower stations including Tarbela, Ghazi Barotha and Chashma.

During Putin’s trip, the two countries are expected to sign a memorandum of understanding to push ahead with assistance for the power and gas supply projects. Representatives of Russian companies are also likely to accompany the president, who may announce investment in oil, gas and mineral exploration in Pakistan, officials say.

Under the energy cooperation programme, Pakistan has shown willingness to award a contract without bidding for the multi-billion-dollar Iran-Pakistan gas pipeline. Russia has also offered financing for the transnational Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.

The government desires to strike gas project contracts on government-to-government basis only, with no role for private Russian firms. The cabinet may be asked to waive public procurement rules for the award of pipeline contracts to Russia.

The government has already floated tenders, inviting bids for construction and procurement of pipeline for the IP project, costing $1.5 billion. According to the tender terms, the firms that promise financing will get additional points.

“Russian energy giant Gazprom may also participate in the bidding with a pledge of financing,” a government official said.

At present, Pakistan is negotiating the construction of IP gas pipeline with three countries – Iran, China and Russia.

“We will award IP contract to the country which first extends financing for constructing the pipeline, staving off pressure from the United States,” the official said.

Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’. According to the plan, Tehran will provide the pipeline and compressors on credit to Pakistan, which will make payments after two years.

Iran is also willing to provide $250 million on government-to-government basis and can extend a major part of financing from its commercial banks. Pakistan needs around $500 million to finance the pipeline.

Power, steel mill projects

“Moscow has also agreed to finance rehabilitation of Guddu and Muzaffargarh power plants and a deal may be reached in this connection during the Russian president’s visit,” an official of the Ministry of Water and Power said.

In addition to this, the two countries may enter into a deal for expansion of financially troubled Pakistan Steel Mills. During the working group meeting held late last month, they had discussed ways of enhancing the capacity of the steel mill with promise of Russian support.

Under the programme, the mill’s production capacity will be enhanced to 1.5 million tons per annum from existing 1.1 million tons. Initial cost of the project is estimated at Rs30.45 billion, though actual cost will be determined after a technical audit of the plant by a Russian company.

Russia has linked provision of financing for the project with award of contract to its state-owned firm VO Tyazhpromexport.

In the working group meeting, the Russian authorities offered $500 million for the Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.

Under the project floated in 2006, 1,000 to 1,300 megawatts of surplus electricity will be imported from Tajikistan and Kyrgyzstan. “US, World Bank and Islamic Development Bank (IDB) have also backed the project,” an official said.

Here's an ET-APP story on renewable energy to overcome Pakistan's energy crisis:

The chief executive of the Alternative Energy Development Board (AEDB), Arif Alauddin has said that a number of projects are in the pipeline to overcome the energy crisis in the country; giving relief to the people.

Giving an interview to the Pakistan Television Corporation (PTV), he said that 500 megawatts (MW) of electricity will be added to the national grid in the next few months. He said that his board is mandated only to attract private sector investment while the public sector was meant only to regulate and facilitate the process.

“Pakistan is relying heavily on fossil fuels to meet its energy requirements and the nation is spending more than $11 billion on import of petroleum products annually,” Alauddin said. The oil import bill will increase to $38 billion by 2015 and Pakistan remains at a strategic risk due its heavy reliance on fuel imports, he added.

He said that after the establishment of the AEDB in 2003, Pakistan has made considerable progress in this field. To a question, he replied that the board recently approved the New Park Energy Phase I – a 400MW wind project near Port Qasim. With help of the China Three Gorges Corporation, a 50MW wind energy plant in Sindh will be completed by next year The chairman said that recently, a memorandum of understanding has been signed at a two-day second Pak-China Joint Energy Group (JEWG) for setting up wind energy projects.

To another question, he said that a number of countries have successfully developed renewable energy sources to minimise dependence on fossil fuels. Realising country’s growing demand of the industrial and agricultural sectors and growing domestic consumption; the government has initiated several renewable energy projects to address the power shortfall, he said.

Here's an ET report on Russian interest in building Diamer Bhasha dam:

Russia is seeking direct award of a construction contract for the $13 billion Diamer Bhasha Dam in a government-to-government deal without resorting to international competitive bidding, sources say.

Faced with water and power shortages, Pakistan is looking for funds from China and Russia, who in turn want a government-to-government deal without international bidding.

The government’s search for funds came after multilateral donors asked Pakistan to get a no-objection certificate from India for the dam’s construction.

China and Russia want a similar arrangement for undertaking the Iran-Pakistan gas pipeline project, which has faced fierce opposition from the United States.

According to sources, Pakistan and Russia are likely to strike a final deal on the dam during visit of Russian President Vladimir Putin to Islamabad next month.

“A meeting of Pak-Russia inter-ministerial commission will be held before the visit of Russian president, which will work out a mechanism for financing mega projects,” a government official said.

In a meeting of the Inter-governmental Commission (IGC) held here on Monday, government officials gave a detailed briefing to the Russian team on planned energy projects. However, sources said, Russia made no firm commitment to the dam.

According to the official, it was just a preparatory meeting to discuss different projects, which could be tabled during deliberations with the Russian president.

In the IGC meeting, the Russian side was told that Bhasha Dam was a strategic project with power generation capacity of 4,500 megawatts to overcome the energy crisis. It will have water storage capacity of 8.5 million acre feet to feed the agricultural sector.

Chinese offer

The Chinese government has already offered Pakistan skilled labour for the construction of Bhasha Dam. China has 17,000 skilled workers, who have worked on the giant Three Gorges Dam, which is producing 30,000 megawatts of electricity.

On the other hand, multilateral donors have asked Pakistan to seek a no-objection certificate from India to pave the way for financing the dam, which they say is situated in a disputed territory. Instead, they have offered to finance another project – Dasu hydropower, but the government has rejected the plan and wants to complete Bhasha Dam first.

On Monday, a delegation of the World Bank, headed by Country Director Rachid Benmessaud, called on Federal Water and Power Minister Ahmed Mukhtar and once again offered to finance phase-I of the Dasu project.

Dasu hydropower project is situated 7 km upstream of Dasu village on Indus River and 350 km from Islamabad. The project is located in Kohistan district of Khyber-Pakhtunkhwa.

Italy’s largest oil company, reported a natural gasdiscovery in Pakistan, a country where reserves have been in decline.

The find was made 350 kilometers (269 miles) north of Karachi in the Khirtar Fold Belt region. The well was drilled in the Badhra Area B block to a depth of 2,450 meters, Eni said in a statement today.

Eni said the size of the discovery was probably 300 billion to 400 billion cubic feet of gas in place. Pakistan’s total gas reserves were 27.5 trillion cubic feet at the end of 2011, down 5.5 percent from a year earlier, according to BP Plc (BP/)’s Statistical Review of World Energy.

The discovery is 20 kilometers east of Eni’s Bhit gas processing facility and the company said it has already started discussions with the Pakistani regulator to speed up the production from the discovery. The company produced approximately 54,800 barrels of oil equivalent per day in 2011 in Pakistan, making the Rome-based explorer the country’s largest producer.

“The drilling of Badhra North B-1 is part of Eni’s new strategy in Pakistan which aims to refocus exploration activities in the neighboring areas to productive fields,” the company said.

The Badhra block is operated by Eni, with a 40 percent stake in the project, Premier Oil Plc (PMO), which has 6 percent, Kufpec Pakistan Ltd. with 34 percent and Oil & Gas Development (OGDC) Company Ltd., which has 20 percent.

Premier Oil’s shares rose as much as 3.2 percent, to 391.4 pence. They were trading at 383.5 pence as of 9:56 a.m. London time. Eni SpA’s shares were up 0.7 percent at 18.42 euros after reaching a high of 18.56 euros.

Pakistan has released 60 oil and gas exploration and production blocks for auction, a Ministry of Petroleum official said Tuesday.

The release is part of a new policy to spur development of the country's oil and gas industry that includes a rise in rates for any gas produced to $6-6.60/MMBtu, from $4.20/MMBtu earlier, the official said. The rate for offshore blocks in areas designated shallow zones is set higher at $7/MMBtu, deep zones at $8/MMBtu and ultra-deep zones at $9/MMBtu.

"Interested oil and exploration companies and countries have almost two months to submit bids, the official said.

The bids will be opened December 13 and the names of successful bidders announced a week later, he added.

The government is hoping to sell four of the blocks under government- to-government agreements, he added.

Exploration activity in Pakistan has slowed in recent years due to the low prices offered by the government and the impact of circular debt issues in the oil and gas sector. The country has gas reserves of 23 Tcf/day.

Pakistan's current domestic gas demand exceeds its production capacity of 4.2 Bcf/day by 1.2-1.4 Bcf/day, which increases to 2 Bcf/day in winter. If adequate gas is not discovered within 3-4 years, the shortfall is projected to increase to 2.5-3 Bcf/day.

Here's Peninsula Qatar story on new power generation capacity addition in Pakistan:

SLAMABAD: In order to meet the higher demand for power, the government of Pakistan has spent Rs138.213bn ($1.455bn) on different power generation projects and has managed to generate only 2,996 megawatts (MW) extra in the last five years, sources in the Ministry of Water and Power revealed.

The government spent Rs38.729bn in government-owned power generation companies (GENCOs) for investment in new power plants, Rs47.6bn in National Transmission and Despatch Company (NTDC) for improvement of transmission network and Rs51.884bn in distribution companies for revamping of their 132 KV, 11 KV and Low Voltage Network.

The sources said that these expenditures enabled the government to transmit output of 2,996 MW of the new power plants to load centres.

It will also be providing capacity for accommodating future increase in load demand and removing transmission network constraints to allow distribution of power to constrained areas of main load centres and Balochistan.

The government has also spent the amount in improvement and revamping of power distribution companies (DISCOs) networks for meeting load demand, accommodating new connections and reducing losses.

In addition, the government has spent generously under the head of subsidy to mitigate electricity crisis in the country and spent Rs701.2bn in the last five years.

The subsidy injection enabled DISCOs to pay the outstanding bills of independent power producers (IPPs) to overcome fuel shortage.

This crisis mitigation effort resulted in an overall increase in electricity generation and electricity consumption by 10 percent over the last three years and 3.0 per cent per annum on compound growth basis.

In addition the works of village electrification and new connections were facilitated. Consequently 57,777 villages were electrified and 3.926m connections were installed.

Here's a Business Recorder report on Tarbela dam's 4th tunnel power generation project:

The government would award the contract of 'Tarbela Fourth Extension Hydropower Project', costing $928.9 million, including $840 million World Bank loan in March next year to initiate Civil and Engineering and Management (E&M) work. According to documents obtained by Business Recorder, mobilisation of contract was expected by the end April 2013. Pre-qualification of applicants for Civil and E&M works is under way.

The project would be completed by June 2018. The government would spend $88.9 million for this project. Tarbela has an installed power generation capacity of 3,478 megawatts on tunnels 1, 2 and 3 while tunnel 4 was originally intended for irrigation water releases only, but subsequent studies proposed its conversion to irrigation-cum-generation tunnel.

The latest proposed installed capacity of Tarbela is 1,410MW. Ultimately, Tarbela's capacity would be upgraded to 4,888MW after the development of tunnel 4. The projected energy form the project is 3840 GWh/year while annual capacity factor is 31 %.

According to the Project's cost estimate, powerhouse and tunnel work is to cost $307.45 million, turbines, generators and auxiliaries; $434.24 million and implementation of SAP and EMP dam monitoring $28.63 million. Similarly, project management, technical assistance and training cost is $20.45 million while base cost with physical/price construction is $817.9 million.

The Executive Committee of National Economic Council (ECNEC) has approved the Project on August 16 this year for Rs 83.6 billion, including foreign exchange component of Rs 65.8 billion. A million families would benefit from the additional power. Load shedding would be substantially reduced. Documents also showed that about Rs 39 billion per annum revenue was expected after the completion of the Project. During construction period, between 2,000 and 2,500 jobs would be created.

Here's a Nation story on KESC's planned investments to add capacity and reduce cost of generating power:

Karachi Electric Supply Company has reaffirmed its commitment towards Pakistan by announcing an ambitious investment plan in excess of Rs40 billion. According to the statement, KESC has already invested around USD one billion over the last four years in various large scale projects in generation, transmission and distribution. The new Rs40 billion investment plan is aimed at enhancing KESC’s generation capacity, improving its generation fleet efficiency, reducing the cost of power generation and building the requisite transmission capacity to meet growing power demand across its service territory. These projects will be completed over the next 18-36 months and KESC will be arranging required funding from local and foreign institutions in shape of both debt and equity.CEO KESC, in a related statement said, “We believe in the potential that Pakistan offers and despite the difficult operating environment we have demonstrated this through unprecedented investments in the past. The new investment plan is just a reiteration of this belief and comes at a time when Pakistan is witnessing dampening of investors’ sentiments, both local and foreign”.Under the new investment plan, KESC is undertaking combined cycle projects at its three power plants at Korangi and SITE that will significantly enhance the efficiency of these plants and add additional 47 MW of generation capacity. A specially designed ‘Transmission Package’ will see the installation of new transformer bays, addition of 3 new grid stations at strategic locations and extension of 6 existing grid stations. In line with the strategic intent to bring down the cost of generation, the new investment plan will allow KESC to convert two of its oil-fired units of 210 MW each at its Bin Qasim-I to coal. KESC is also undertaking to develop a bio-waste to energy project which will convert cattle manure from Landhi Cattle Colony and organic food waste to produce 22MW of electricity. The new investment plan will help KESC accomplish many strategic objectives, including creation of social and environmental values.

Here's a BR report on 35% increase in power generation machinery imports in Pakistan:

Import of power generation machinery witnessed a surge of some 35 percent during the first quarter of fiscal year 2012-13 (FY13) over the same period of last fiscal year owing to power crisis in the country. Importers said that despite all efforts, the government and power generation companies seemed failed to resolve power crisis. Therefore, continuing power shortage forced the general public, industrialists and exporters to acquire their own power generation machinery.

Presently, they said, industrialists are the major buyers of power generation machinery to produce their own electricity as the energy crisis is directly hurting the production and export of industries, resulting in huge losses and unemployment. Industrialists also want to free their industries of the ongoing energy crisis to avoid losses, they added.

Importers said for last many years the government is claiming to end power crisis, however power shortage issue stays unresolved. According to Pakistan Bureau of Statistics (PBS) the import of power generation machinery rose to $254 million in first quarter of FY13 compared to $189 million in the corresponding period of FY12, depicting an increase of 34.50 percent or $65 million in three months.

Month on month basis, the import bill of power generation machinery for September 2012 rose by 33 percent to $80.37 million as compared to $60.52 million in the same period of last fiscal year. Importers said bulk of power generation machines is being imported from China followed by US, Japan, UK, however China is the largest supplier of power generation machinery and contributing over 70 percent share in Pakistan''s generator import.

Chinese generators are available in all specifications and are cheaper than the US, Japan and UK brands, therefore general public prefers Chinese generators. "We are expecting that import of power generation machinery may witness some rise in coming months owing to persistent long power outages across the country," importers said.

Although, the country is facing severer power crisis with hours'' long loadshedding, Punjab is the most affected province, where domestic and commercial consumers are worst hit. Usually, Punjab''s different cities especially Faisalabad is seen in the grip of power riots, they said. The situation in Karachi - the economic hub of the country - is slightly better than Punjab but not satisfactory as people and industry also suffering from loadshedding. Therefore, Punjab is the main market for power generation machinery as compared to Karachi, which generators'' sale is slow. Since 2004-05 the country has been witnessing a massive surge in the demand and import of power generation machinery. It has spent over one billion dollars on the import of power generation machinery during the last fiscal year (2011-12).

As construction on a fourth reactor at Pakistan’s weapons-grade plutonium production complex at Khushab continues apace, an important question is where the government plans to get the uranium needed to fuel its growing fleet of reactors.

The answer cannot be ‘Pakistan’ for much longer, at least not without severe difficulties. Pakistan is not a signatory to the Nonproliferation Treaty, which complicates the import of uranium. Pakistan has been able to secure Chinese LEU fuel assemblies for the Chasma Nuclear Power plants and a limited stock of safeguarded natural uranium fuel assemblies for the Karachi Nuclear Power Plant (KANUPP). However, as Canada stopped supplying Pakistan with fuel assemblies for KANUPP in 1976, this stock is most likely gone by now, causing KANUPP to rely on domestic stocks of uranium in recent decades. The weapons program, including military HEU production and fabrication of fuel for the reactors at Khushab, must also rely on domestic production. Pakistan’s Bagalchore mine was reportedly exhausted and closed by 2000, so uranium resources now only come from the Qabul Khel mine (opened in 1992), the Nanganai deposit (1996), and Taunsa deposits (2002), all using in situ leaching. Current domestic production estimates from these sources stand at 40 tons of uranium per year.

A 2009 study by Mian, Nayyar, and Rajaraman estimates that when applied to the fueling of the Khushab fleet of reactors, the 40 tons per year amount alone can only support approximately 150 MWt of total reactor capacity operating at 70 percent efficiency and a low burnup of 1000 MWd/ton. Forty tons would just barely support the first three reactors. Today, there is a fourth.

In my recent paper, Combining Satellite Imagery and 3D Drawing Tools for Nonproliferation Analysis: A Case Study of Pakistan’s Khushab Plutonium Production Reactors, I sought to refine maximum thermal capacity estimates of the reactors based on 3D analysis of each reactor’s cooling towers (snapshot below). Using these estimates, the table here shows how the completed four reactors at Khushab would operate at around a total of 200 MWt at 70 percent efficiency, which translates to a requirement of as much as ~70 tons of uranium per year. The reactor capacity estimates in my paper are upper limits based on cooling capacity. Seventy tons of uranium is therefore also an upper limit. The reactors could be slightly smaller, with overdesigned cooling systems, or Pakistan may plan to operate the reactors at a lower capacity. Still, Pakistan appears likely to run a uranium deficit, perhaps as much as 30 tons, that could exhaust uranium stocks and eventually the deposits themselves.--------Along with the fact that phosphoric acid is widely traded for the production of fertilizer, it is also not subject to heavy scrutiny through export controls. Morocco in particular is a major exporter of phosphoric acid as it holds nearly 77% of worldwide phosphate rock reserves. In recent years, Pakistan and Morocco have established a joint venture to ensure “uninterrupted supply” of phosphoric acid to Pakistan on a large scale. Export of phosphoric acid, a legitimate commodity, is not prohibited and there is no evidence that the joint venture is supporting Pakistan’s nuclear weapons program or engaged in any nefarious activities. An important question is how much uranium may be inadvertently transported through the trade of phosphoric acid for DAP production...

The US Special Envoy and Coordinator for International Energy Affairs Ambassador Carlos Pascual was in Islamabad on Friday as head of the US delegation at the fourth US-Pakistan Energy Working Group meeting.Secretary of Water and Power Nargis Sethi and Secretary of Petroleum and Natural Resources Dr Waqar Masood Khan co-chaired the annual Energy Working Group meeting.The meeting is part of an ongoing bilateral dialogue to help address Pakistan’s energy sector challenges, including power generation, fuel, gas, and reform priorities.At the conclusion of the meeting, the three officials announced that the United States government will fund an international consultancy to assist Pakistan in acquiring liquefied natural gas (LNG).Secretary of Water and Power Sethi highlighted the need for an improved and sustained governance structure as a key element for a sustainable power sector and the steps taken so far.Special Envoy Pascual welcomed the Pakistani government’s commitment to the reform process, improving governance, improving the financial viability and efficiency of the power sector and energy sector in general, and attracting private sector investment in energy production and distribution. The Secretary of Water and Power expressed her appreciation for U.S. assistance under the power distribution improvement project and the energy efficiency programmes.Special Envoy Pascual also welcomed Pakistan’s adoption of the 2012 Petroleum Exploration & Production Policy, noting that it that has the potential to spur investment in exploration throughout Pakistan. Secretary Khan pointed out the imminent Pakistani oil and gas delegation meetings in Houston and London to promote the auction of licenses for 60 blocks (or exploration zones). “Today, the United States government and the Government of Pakistan launched a new initiative to help Pakistan acquire liquefied natural gas more efficiently,” said Ambassador Pascual at the the working group, “This initiative shows the United States and Pakistan working together on concrete actions to relieve Pakistan’s chronic shortage of electricity. It will accelerate the liquefied natural gas procurement process and offer a cheaper alternative to Pakistan’s current fuel oil imports.” The LNG consultancy, which will commence work before the end of the year, will assist the Government of Pakistan in the terms and assessment of liquefied natural gas supply and delivery from international suppliers.The effort will speed the procurement process, saving the government the expense of fuel oil imports that are currently used to generate much of the nation’s electricity. The consultancy will also provide market analysis and technical assistance to the government’s implementer of LNG imports. Beyond today’s agreement, the United States and Pakistan together are carrying out large-scale energy projects, that will add 900 megawatts of capacity to the power grid by the end of next year — enough to supply electricity to an estimated 2 million households.These projects include renovating the power plant at the Tarbela Dam; modernizing the generators at the Mangla Dam; upgrading the Guddu, Jamshoro and Muzafaragarh power plants; and building the Satpara and Gomal Zam dams. US technical assistance is also supporting crucial policy and management reforms underway in the Ministry of Water and Power. These reforms are focused both on reducing the power grid’s technical losses and on increasing collections.

Here's a Reuters' story on Italian energy giant exploring oil and gas onshore and offshore in Pakistan:

MILAN: Italy’s Eni has strengthened its hand in Pakistan by agreeing to buy offshore gas acreage as the oil and gas major continues to channel cash into more profitable upstream activity.

In a statement on Thursday Eni said it had signed a deal with Pakistan and state oil company OGDCL to acquire 25 per cent and operatorship of the offshore Indus Block G licence, located in Pakistan’s Indus Basin.

Eni is the leading foreign producer in Pakistan with an equity output of 58,000 barrels of oil equivalent per day (boed).

In September it announced a significant onshore gas discovery in a country which it is counting on as part of its strategy to develop assets and bring them to market rapidly.

Huge cost overruns and delays at Kashagan, the world’s largest oil development, have raised questions about its ability to deliver large-scale projects on budget and on time.

Eni, the world’s No. 7 oil company in terms of production, is selling non-core assets like gas transport group Snam and Portuguese energy group Galp Energia to focus on oil and gas exploration.

The company, which produced 1.7 million boed in 2011, has said it is looking to add more than 1.3 million boed of new production by 2022.

Over the past year, Eni has dispelled some of the scepticism about its profitability and growth potential by clinching a deal with Russia’s Rosneft and scoring exploration successes in Norway and Mozambique.

The 7,500-square-kilometre block in Pakistan is “in ultra deep water of an underexplored and promising area offshore Pakistan”, Eni said.

The consortium managing the block is composed of the two state companies OGDCL and Pakistan Petroleum, Eni and United Energy Pakistan Limited – each holding a 25 per cent stake.

Karachi-based Byco Oil said it had completed Pakistan's largest oil refinery at Balouchistan with a capacity of 120,000 barrels per day, which is expected to reduce the country's imports of oil products.

The new refinery, manufactured in the UK and assembled in Pakistan, is currently in the pre-commissioning stage, with tests being done on various equipment, the company said on its website. Byco Oil is the parent company of listed Byco Petroleum .

"It will enhance overall crude oil refining capacity in the country from an existing 12.25 to 18 million tonnes per year and will significantly contribute in reducing a shortage of refined petroleum products in the country," the statement read.

Byco officials could not be reached for comment.

The new plant will more than triple Byco's current capacity of 35,000 bpd at its existing refinery.

The refinery can be further expanded up to 180,000 bpd, the company said.

An isomerisation plant to produce higher volumes and cleaner motor gasoline is also being commissioned with the refinery.

Pakistan operates five other refineries, the largest of which is Pak-Arab Refinery's 100,000 bpd plant.

Pakistan State Oil, a major oil importer in the country, imports about 250,000 tonnes of diesel every month through term volumes, they added.

The good news is that circular debt in the energy sector is going down. The bad news is that it is doing so for all the wrong reasons.

Circular debt has now become shorthand for the crippling string of financial liabilities that energy companies owe each other because the federal government fails to live up to its promise to pay out energy subsidies that it announces as vote pleasers. This debt has resulted in a massive cash shortage virtually all along the energy chain and significantly reduced the ability of power companies to operate at full capacity, which in turn causes massive power outages throughout the country, particularly during the summer months of peak demand.

But now at last, it appears that the government is paying out what it owes in subsidy payments. Azfar Naseem and Sateesh Balani, research analysts at Elixir Securities, an investment bank, estimate that total circular debt throughout the energy chain has not only stopped growing, but has shrunk by about Rs137 billion during the first six months of the fiscal year ending June 30, 2013.

Part of this reduction has come from higher subsidy payouts to the energy sector from the finance ministry, which rose to Rs160 billion between July 1 and December 20 of this year, about 5% higher than the net payouts throughout the whole previous fiscal year that ended June 30, 2012.

Another significant chunk came when the government effectively forced the state-owned Oil & Gas Development Company (the largest company in Pakistan by market capitalisation) to buy about Rs82 billion in government bonds meant to clear out the outstanding liabilities. The bonds do not mean that the government has paid out its liability: they just mean that they forced OGDC to pay the rest of the energy chain and promised to pay OGDC back.-----------The government was given this fiscal breathing room by the inflow from the United States in the form of $1.1 billion in outstanding dues on account of the Coalition Support Fund. That entire amount, by some accounts coming out of the finance ministry, was spent on power subsidies. Yet the government may well be running out of accounting tricks to patch up the power sector before the elections.

The reason the government has tried to juggle around its scarce cash reserves is because it wants to make sure that the power companies have enough cash to buy the fuel they need to keep the lights on in the country, at least most of the time, in the run-up to the elections, expected around May 2013.

These techniques appear to be having at least some positive impact: the outstanding receivables at Pakistan State Oil, the largest oil retailer in the country, are down by almost 40% to around Rs120 billion. Receivables at Hub Power Company and Kot Addu Power Company (which supplies politically important regions of southern Punjab) are also down substantially....

Sunday, December 30, 2012 - Karachi—Prime Minister of Pakistan Raja Pervez Ashraf has said that the Parliament is the mother of all institution, strengthening the democracy means strengthening of the parliament.

Addressing the leadership, President/Office Bearers and members of Karachi Chamber of Commerce and Industry (KCCI) here today, the Prime Minister said that energy crisis was due to increasing demand and supply gap while the electricity was also provided to the villages.

The government inorder to enhance energy production is working on Jhelum-Neelum, Diamir Bhasha and Thar Coal was in progress. He stated that Judiciary was playing its role and media was free and strong democracy will prevail in the days to come. Provinces have been empowered with transfer of Rs 1000 Billion, he stated

The business and industrial community of Karachi contributes largest chunk of revenue in the national exchequer and holds a distinction in Pakistan as well as the region. He stated that the KCCI is the role model and trendsetter of the business community. He said that the businesspersons are chosen ones to provide employment to the people, he complimented.

To make Pakistan strong, the business community has to be strengthened, he maintained. He ordered the Chief Secretary Sindh to revisit the case of factory fire incident as an accident and rectify the charges under proper sections of Pakistan Penal Code referring accident instead of PPC-302. For prosperous Pakistan, he emphasized on the collective efforts by all the segments of the society.

Highlighting some achievements of the government, Raja Pervez Ashraf said that many challenges were converted to opportunities by the Government as the forex reserves and exports increased, inflation reduced to single digit.

Karachi—Prime Minister of Pakistan Raja Pervez Ashraf has said that the Parliament is the mother of all institution, strengthening the democracy means strengthening of the parliament.Addressing the leadership, President/Office Bearers and members of Karachi Chamber of Commerce and Industry (KCCI) here today, the Prime Minister said that energy crisis was due to increasing demand and supply gap while the electricity was also provided to the villages.The government inorder to enhance energy production is working on Jhelum-Neelum, Diamir Bhasha and Thar Coal was in progress. He stated that Judiciary was playing its role and media was free and strong democracy will prevail in the days to come. Provinces have been empowered with transfer of Rs 1000 Billion, he statedThe business and industrial community of Karachi contributes largest chunk of revenue in the national exchequer and holds a distinction in Pakistan as well as the region. He stated that the KCCI is the role model and trendsetter of the business community. He said that the businesspersons are chosen ones to provide employment to the people, he complimented.To make Pakistan strong, the business community has to be strengthened, he maintained. He ordered the Chief Secretary Sindh to revisit the case of factory fire incident as an accident and rectify the charges under proper sections of Pakistan Penal Code referring accident instead of PPC-302. For prosperous Pakistan, he emphasized on the collective efforts by all the segments of the society.Highlighting some achievements of the government, Raja Pervez Ashraf said that many challenges were converted to opportunities by the Government as the forex reserves and exports increased, inflation reduced to single digit....

The current wave of load-shedding will end soon, as water flow in canals will come to normal levels in coming days and production of electricity will increase. The government is making all-out efforts to cope with the current situation and eliminate load-shedding.

The energy mix of the country consists of around 34% electricity generation from hydel resources and 66% from oil and gas. Reports show that hydropower production has dropped from 6,500 megawatts to 1,500MW these days.

Every year, canals are closed in winter for de-silting and the Indus River System Authority (Irsa) curtails water releases from major reservoirs of Mangla and Tarbela during December and January, leading to a sharp decline in hydropower production.

On the other hand, gas companies also cut supply in winter to those power producers, which have nine-month gas supply agreements, disrupting electricity production. Thus, the shortfall increases and the Ministry of Water and Power is left with no choice but to opt for power outages.

However, considering the scale of gas and water curtailment, the power supply has been managed very well. The ministry is mindful of providing maximum relief to people by resorting to load-shedding mostly during night and very less power cuts in day time so that routine life of people is not disturbed.

The canals are expected to be opened in the second week of January and production of hydropower will increase and outages will come down.

The ministry is also making alternative plans to cope with the power crisis as it is working to increase the generation capacity of existing power plants.

It is very important that the people should also come forward and help the government in conserving electricity, which could be done by saving power through all possible ways. This way, they will not only be helping the government, but will also reduce their electricity bills....

The project was bankrolled by fertiliser group Fauji, a subsidiary of the Fauji Foundation industrial conglomerate.

Nordex has signed supply deals for five more wind farms in Pakistan, each comprising 20 of its N100/2500 turbines. Fauji, Gul Ahmed Energy, Metro Power and Yunus Energy are the customers for those projects.

Nordex expects construction at two of those other wind farms, with a combined capacity of 100MW, to start this year.

With a growing power demand and blackouts common, Pakistan is committed to expanding renewable energy, Nordex says.“The fixed feed-in remuneration of around $0.1466 per kWh for a period of 20 years for wind-produced electricity is making the market attractive for investors," it adds.

Nordex initially oversaw the Jhimpir project via its Beijing subsidiary, but has now established a separate local company in the Pakistan capital, Islamabad.

The Federally Administered Tribal Areas (Fata) and Frontier Regions (FR) have enormous reserves of minerals, oil and natural gas that can augment economic activity in the war-torn areas, a research project concluded.

Talking to The Express Tribune ‘Source Rock Mapping and Investigation of Hydrocarbon Potential (SRMIHP)’ Project Coordinator Dr Fazal Rabi Khan said that exploration and excavation of oil and gas will introduce a new era of development and prosperity in the tribal areas.

“There can be many job opportunities created for people in the tribal belt if mineral exploration and extraction is pursued properly,” said Khan, who is also the chairman of the Geology Department in Abdul Wali Khan University Mardan (Palosa Campus).

The project was launched in 2008 under an agreement between the Fata Development Authority and National Centre of Excellence in Geology University of Peshawar. The project, which was completed at an estimated cost Rs40 million, was completed in June 2012.

Khan said that their objectives include identifying hydrocarbon generating rocks and its distribution in the region, preparing a geo-database regarding hydrocarbon potential and generating a systematic data to attract oil and gas companies for exploration.

The project has successfully collected, processed and digitised the data as a result of which, 80% of the project area has been mapped digitally. “This mapping has led to the discovery of seven new oil and gas seepages.”

He added that 11 oil and gas exploration companies have reserved 16 blocks in Fata, which go across from FR Peshawar and Kohat to Khyber, Orakzai, Bannu, Tank and up to North and South Waziristan.

He said that recently 17 oil and gas exploration companies initiated their operations in Khyber, Orakzai, North and South Waziristan agencies as well as in FR Peshawar, Kohat, Bannu, Tank and DI Khan.

Oil and Gas Development Company (OGDC) will start drilling in these areas for the exploration of oil and gas reservoirs. The chairman said that the foreign oil company, Tullow, has obtained a licence for the exploration of oil and gas in North Waziristan Agency and Bannu, while MOL has shown interest in Khyber Agency, Kohat and Peshawar.

“Although law and order problems can become a hindrance, the project can be managed considering its importance,” he added.

Khan elaborated that the process in Fata would not only help overcome the energy crisis but will also give a big boost to efforts for the socio-economic development of the region. Khyber-Pakhtunkhwa is teeming with minerals and Fata is a new oil estate, he said. “In the next five years, this province will produce more oil than Dubai and as far as shortage of gas is concerned, the hills of FR Tank are full of it.”

He said Governor Masood Kausar has also taken keen interest in the project. “The best news for the tribal areas is that there are large reserves of natural resources and foreign and local companies interested in its extraction can exploit the resources,” said Kausar.

^^RH: "The United States has objected to China supplying C3 and C4 on the grounds that any Pak-China nuclear cooperation would require consensus approval by the NSG, of which China is now a member, for any exception to the guidelines. The US is applying double standards since it supported and got approval for such an exception from NSG for its own nuclear deal with India"-----

Where is the "double-standard"?

You are yourself writing that the US "GOT approval for such an exception from NSG for its own nuclear deal with India".

Then where is the "double-standard" when the US tells China that it would ALSO require the SAME "consensus approval by the NSG" for its deal with our country?

In fact, if the US did not object, then there would be a double-standard, as that would mean that the US needed to get consensus-approval from the NSG but China does not.

You must be blind not to see the US double standards on non-proliferation.

On the one hand the US gives and endorses giving nuclear technology to India and ignores Israel's nukes, and on the other hand it ties to block Pakistan and Iran and others from obtaining it from alternate sources.

ISLAMABAD - Ministry of Water and Power is managing portfolio of 37 Independent Power Producers (IPPs) through Private Power and Infrastructure Board (PPIB) with a cumulative capacity of 11,771MW for solution of energy shortage problem in the country.

These projects, being managed on the basis of water, coal, gas and oil resources, are at various stages of implementation and will be commissioned this year through 2019. An official source on Monday said in addition to this there are numerous Hydro Power Producers (HPP) projects under construction for a cumulative capacity of 6054 MW which are also due to be commissioned from 2016-19.

He said the Ministry of Water and Power has been working on war footing to overcome the energy crises and was undertaking different projects under its two pronged strategy both in public and private sectors to meet the demand. It is pertinent to mention here that six IPPs, having cumulative capacity of 2530 MW have been commissioned through private sector since 2008.

Moreover, he said, the Ministry is determined to enhance production of existing power plants through GENCO rehabilitation projects and addition of new power plants like 747 MW combined cycle power plant at Guddu is underway for addition in the system. Under conservation measures, the official said in pursuance of Cabinet Decision two holidays were announced per week for all government offices which have resulted in conservation of approximately 250 MW.

Steps have been taken to minimize the load of unnecessary lights and hoardings while concerned departments have been requested to replace the street lighting with LEDs and use of solar energization to reduce load. He said a replacement of agricultural tubewell motors with efficient motors in MEPCO and IESCO are in progress which will also result in conservation of up to 60 MW electricity. A project of distributing 30 million CFLs to domestic consumers has been initiated which will ultimately result in conservation of 1000MW, recently a bill has been placed before National Assembly for introducing penalties to individuals involved in electricity theft which will result in reducing theft and increasing receivables in circular debt and line losses of the system.

He said an improvements in the system are underway by introduction of Advance Metering System (AMR) which will also help to reduce line losses and ultimate reduction in load while rehabilitation of transmission lines in collaboration with international funding agencies is also being implemented to improve the efficiency of the system.

^^RH on Jan 14, 2013 : "Here's a Nation newspaper report on power projects under way in Pakistan.."-----

You have mentioned a LOT of projects in this 3 year old article.

Can you give us an UPDATE on them?

How many of these projects materialized? If they did not materialize, why not? What are the problems?

How is that "Mashal" LNG import project coming along? How are the German-funded hydroelectric projects progressing? Any updates on the Iran pipeline? Has Russia's Gazprom finished building it yet? How about the VAST reserves of coal in Thar? Has the mining started? How many billions have the Chinese put into our energy system since your wrote this article saying they would? The SC has just issued an arrest warrant for the PM for corruption in the rental power plants case-- how are those plants doing? Has the circular debt problem decreased or increased in the last 3 years since your wrote this article?

In summary, if all the hopeful things you projected 3 years ago have turned out be be merely ephemeral fluff, why should anyone believe you now when you ONCE AGAIN go "here are some projects underway in Pakistan"? What guarantee do we have that this is not going to also wind up like the projects you listed in the original article?

Country’s average oil production has increased by a decent 10 per cent to 71.6k barrels a day in 2012 from 64.9k in 2011 while gas production, which contributes approximately 50 per cent to energy mix, grew by 4 per cent to an average of 4.2bcfd from 2011 average gas production of 4.1bcfd, latest data revealed.

Industry experts said that five years back in 2007 average gas production was 3.9bcfd. “This increase is well below the organic growth in its consumption thereby creating huge deficit affecting the overall economic growth,” said Nauman Khan, an energy expert. He said that major news of the year was commissioning of KPD-TAY that added an average 104mmcfd to the system. However, other gas fields like Qadirpur, Zamazama, Mari led their due hands. However, natural decline in major fields namely Sui and Sawan coupled with reduce production from Tal block diluted its impact.

According to experts, oil production was 70.4k in 2007. Improvement in 2012 was largely attributed to Nashpa field. During 2012, Nashpa field of Naspha block located in KPK region of the Pakistan was the star performer for the sector. Thanks to favorable results of its appraisal wells, fields production increased by a mammoth 109 per cent to above 11k bpd as against 5.5k bpd last year. Other notable increase also came from Adhi fields as its production rose by a decent 16 per cent. The much talked abou, Tal block production increased by a mere 3 per cent, despite commissioning of Makori East towards the end of the year. Though, experts continue to have conviction in the block’s potential but commissioning of Makori CPF (Central Processing Facility) holds its key.

A Top line security report suggests that near-term trigger is expected to come from materialization production from Sinjhoro fields, Mamikhel-2 and Maramzai-2, while improved production from Naspha, Adhi and Mela fields are also events to keep a track.

Amongst the listed companies, OGDC’s average gas production increased by a decent 14 per cent in 2012, largely attributed to KPD-TAY effect, while its oil production grew by 7 per cent. PPL performed well in the oil, depicting a growth of 12 per cent however, its gas production declined by 4 per cent due to subdued performance of Sui and Sawan. 2012 was a disappointing year for POL whose oil production declined by 18 per cent mainly on account capped production from Tal and decline in production from its own operating fields. Analysts are of the view that with security concerns and circular debt restricting Pakistan oil & gas exploration companies to tap in new reservoir, the sector continues to rely on maximizing the yield of existing reservoirs, industry experts said.

As a result, the increase in oil and gas production in 2012 failed to fill the mounting demand thereby affecting the overall industrial growth besides affecting the transport and other segments

ISLAMABAD - The $ 1.2 billion Iran-Pakistan gas pipeline project, set to be completed next year, may prove a bonanza for the hard-pressed energy sector of Pakistan’s economy as the initiative will supply 750 million cubic feet of gas besides helping to contribute 4000 MW of electricity to the national power grid.Iran is stated to have completed 900 km of work on its side while Pakistan launched its part of work last month, thus setting the stage for an ambitious undertaking which will greatly overcome Pakistan’s severe energy shortages.In the prevailing energy crunch, the PPP-led coalition decided to go ahead with the project despite stiff opposition from some quarters.However, the Pakistani government despite the pressure has signed the agreement with Iran to meet its energy shortages.President Asif Ali Zardari and Iranian President Mahmoud Ahmadinejad signed the Inter-Governmental Framework Declaration (IGFD) of the IP project in Tehran on May 24, 2009. After signing ceremony of the Sovereign Guarantee Agreement (SGA), Pakistan’s then Minister for Petroleum and Natural Resources Naveed Qamar signed Gas Sales and Purchase Agreement (GSPA) with Iran on June 5, 2009 through which Pakistan would import one million cubic feet gas per day.The government had also appointed the engineering and project management teams in April 2012, to conduct route surveys on IP, who later submitted a final detailed report on the project.Pakistan is experiencing a prolonged power crisis, low gas pressure and suspension of Compressor Natural Gas (CNG), adding to the problems of the masses.Advisor on Petroleum and Natural Resources to the Prime Minister Dr Asim Hussain said the government wanted to complete the project as soon as possible in order to overcome the looming power and gas crises.He termed the project beneficial for both countries and said, “We are dependent on this project as there is no other substitute at present to meet the growing energy demand.”He said the government of Pakistan had started work on the project in December 2012, while Iran had already constructed more than 900 km of the gas pipeline on their side.Asim stated that after completion of the project, it would start supplying 750 million cubic feet gas per day.He said the implementation of the project showed that Pakistan had a flexible foreign policy.In a press conference on the sidelines of the summit of the Group of Eight Developing Countries (D8) in Islamabad on November 22, Iranian President Mahmoud Ahmadinejad vowed to complete the multi-billion dollar project within the stipulated time.He said the portion of pipeline on Iranian side was about to be completed while Iran was also extending financial assistance to Pakistan to complete the project.Another purpose of signing this pact was to strengthen the bilateral relations between the two countries.

According to an OilPrice.com Energy Intelligence Report, Pakistan’s tribal areas are believed to have massive reserves of oil and natural gas—which Pakistani officials have suddenly become very keen to demonstrate. But this is a highly restive, war-torn area where one right move could make all the difference, and one wrong move could ignite a conflict with irreversible consequences.

For now, the area remains unexplored and it was only in 2008 when Pakistani geologists began to study the area in earnest, with the support of the local authorities. The results of this research were collected, processed and digitized in June 2012. The geologists discovered seven new oil and gas seepages during the mapping. The geologists also claim that 11 oil and gas exploration companies have already reserved 16 blocks in Fata.

Geologists say the area, bursting at the seams with gas, is poised to become a ‘new oil state’ whose production could rival Dubai’s in only five years.

The interest is evident from: 1) seventeen companies have initiated operations in Khyber, Orakzai, North and South Waziristan, Peshawar, Kohat, Bannu, Tank and Dera Ismail Khan), 2) Tullow has been active in Pakistan since 1991, but since 2008 it has sought to transfer its Asian licenses to focus on Africa and the Atlantic Margin, 3) other players include Mari Gas Company (Pakistan), HYCARBEX (part of American Energy Group ), Saif Energy (Pakistan), MOL Pakistan Oil and Gas, Orient Petroleum International (Ocean Pakistan/Cayman Islands), ZHEN (China), and others and 4) Oil and Gas Development Company (OGDC) of Pakistan is set to begin exploratory drilling in the area soon.

The report has also talked about Gwadar port. In terms of infrastructure, China has been the chief architect, and investor. China has already invested around $300 million in the deepwater Gwadar Port close to Gulf of Oman.

Construction began in 2002 and the goal was to make this port a transit hub for landlocked countries (Afghanistan and Central Asia) and to boost transit from the Persian Gulf to East Africa. China plans to invest a total of $1.6 billion in the port—so far it’s cost $200 million to build the first three berths, which can handle $2 billion in cargo annually.

Despite its capacity, cargo has been slow to move through this port, largely because it’s not connected to the rest of the country.

Here's a ET report on additional gas production expected in Pakistan this year:

KARACHI:

Pakistan’s gas crisis – which has forced the shutdown of factories, caused sporadic street protests, and created chaos at CNG pumps – will ease by next winter, says a senior industry executive.

“It cannot get any worse than this,” Asim Murtaza Khan, the managing director of Pakistan Petroleum Limited (PPL), said in an interview with The Express Tribune. “I am not saying that the gas shortfall will decrease, but there will be enough additions to stop the situation from getting uglier,” he stated.

Natural gas is the most-consumed fuel in the country, used to run everything from factories, stoves and cars. The fuel’s demand stands at 6.2 billion cubic feet per day (bcfd) whereas supply comes to just about 4.2 bcfd.

Khan’s optimism relies on untapped resources in mature fields, from where around 100 million cubic feet per day (mmcfd) is expected to be added in the coming months. This addition will come from the Tal, Nashpa, Kunar Paseki Deep and PPL-operated exploration blocks in Sindh, like Serani and Gambat.

However, Khan says that importing gas has become imperative. “There is no way we can meet all the demand from indigenous sources. We must import.”

Expansion problems

Most of the country’s gas is extracted in Sindh, but large tracts of prospective areas remain unexplored in Balochistan and Khyber-Pakhtunkhwa, where petroleum industry officials have been attacked in the past.

In Sui, the country’s oldest and second-largest gas producing field, PPL runs schools and hospitals in the area, and pays soldiers for protecting its installations from insurgent attacks.

“The money that we have put in for corporate social responsibility and security is immense. And yet there is resentment.”

Shale gas policy in offing

PPL, along with Austrian and Italian petroleum companies, is working on a pricing mechanism which will make the exploration of shale gas feasible, Khan said.

“There might be a lot of potential for shale gas, but we don’t have data. The last survey was done in the 1980s. We are trying to compile that data first,” he said.

Last year, PPL engineers drilled out a sample from the Hala Block. The 18-metre long core is being tested by experts in Houston, USA, to examine the potential for shale gas exploration.

Financial woes

PPL is one of the worst-hit victims of inter-corporate circular debt, which continues to bog down the energy supply chain of the country.

“We have around $300-350 million stuck in debt. Imagine what we could have done with that money. It would have spurred exploration activity,” Khan said.

With government being its largest shareholder, PPL is also obliged to pay out cash dividends on a regular basis – something that has to be stopped once the company starts hitting oil and gas discoveries.

“Shareholders should be prepared, because we would need cash to start production. Normally, $200 million are spent on the development of field alone,” he said.

“We have enough cash to finance exploration activities right now. The stage where cash dividends might possibly have to be cut could come in the next two years.”

Offshore expedition

A consortium of comprising PPL, the Oil and Gas Development Company and ENI will start drilling for petroleum reserves in the Arabian Sea next year. Exploration in Block G of the Indus delta comes on the heels of successive prospecting failures in the area, which remains one of the least-explored offshore regions.

“Offshore investment is an expensive proposition,” explains Khan, acknowledging the scepticism. “But at least we are getting the data. The geology and depth of the offshore basin makes it very difficult to prospect there. However, it doesn’t mean we should give up.”...

Engro Corporation President and CEO Muhammad Aliuddin Ansari has stated that the Asian Development Bank (ADB) does not object to financing the switchover of thermal power plants to Thar coal.

“The directors of ADB have met me and the chief minister of Sindh and said that they had no objection to the conversion of power plants to Thar coal and are ready to finance [such projects],” he told The Express Tribune.

The revelation comes on the heels of the Ministry of Water and Power’s claim that the ADB is not ready to finance the conversion of power plants to Thar coal, and that the lending authority would finance power plants that run only on imported coal.

Ansari also said he is ready to travel to Manila along with a delegation from the water and power ministry to meet ADB officials and negotiate a financing deal for such projects.

Ansari recalled that it had been decided in a special board meeting of the Thar Coal Energy Board (TCEB) on October 3, 2012, chaired by the prime minister of Pakistan, that existing oil-based power plants should be modified and redesigned to Thar coal specifications, and that new coal-based plants should also be designed keeping the same specifications in mind.

It was also decided in the meeting that agreements would be signed between power generation companies and the Sindh Engro Coal Mining Company (SECMC) for the supply of coal for an existing 420 megawatt (MW) power plant in Jamshoro, as well as a new 600MW power plant to be built in the same location. These agreements were to be finalised and signed within a week, but never materialised.

Ansari said that Pakistan was facing a circular debt issue due to the poor energy mix employed by generation companies, and that conversion of power plants to run on Thar coal could address this issue. He claimed that Thar held the future of Pakistan, and reiterated that all future power plants should be designed on Thar coal specifications.

“Not only has the fuel mix shifted from gas to furnace oil, the price of furnace oil has increased four times in the last five years. This has increased the furnace oil bill by 461%, whereas power generation through furnace oil has increased by only 79%,” said a handout provided by Engro Corp as part of the interview.

Ansari said that Indonesia and India both held coal reserves that were similar in specification to the coal available in Thar. He remarked that India is expected to become a major market for coal by 2016: it already imports significant quantities to meet its needs....

^^^HWJ: "All the US is saying is the CHINA must ALSO obtain NSG consensus before doing the same to Pakistan"-----

There is global consensus on this Nuclear Deal and nobody has raised any objections:http://alturl.com/3db7f

All we need to do is find out what Bangladesh did to get its own Nuclear Deal and then just copy them. We can say to the world, "we must be given the same Nuclear Deal that was given to Bangladesh. There must be no discrimination on this issue".

^^RH: "You are hung up on this misgusided comparison. BD is a signatory to NPT; Pak is not.BD has no nuclear weapons; Pak does."------

This is my point exactly.

The US/UK will block all nuclear reactors sales to our country. Even China's gesture of using a grand-fathering excuse to slip-in a couple more reactors is withering away.

But Bangladesh can freely get as many fully-financed Nuclear reactors as they want. Russians, Chinese and French are already there discussing plans for 10,000 MW of Nuclear Power over the next 20 years--with full financing on easy terms.

So the price we have to pay for being a "Nuclear Power" is that we will be on the sidelines watching as Bangladesh-- without being a "Nuclear Power"--whizzes by us in terms of actual production of electricity using Nuclear Technology.

We will be sitting in the dark with our Nuclear Weapons, while Bangladesh will be brightly lit without them.

HWJ: "So the price we have to pay for being a "Nuclear Power" is that we will be on the sidelines watching as Bangladesh-- without being a "Nuclear Power"--whizzes by us in terms of actual production of electricity using Nuclear Technology....We will be sitting in the dark with our Nuclear Weapons, while Bangladesh will be brightly lit without them."

You must be out of your mind to suggest that.

Just remember what US Amb Anne Patterson wrote in a 2009 cable: "The Pakistani establishment, as we saw in 1998 with nuclear test, does not view assistance-even sizable assistance to their entities-as trade-off for national security".

There's absolutely ZERO chance than Pakistan would unilaterally disarm in the face of continuing threat from India, a country that invaded and divided Pakistan in 1971.

Do you know what it takes to have a nuclear weapons program? It takes at least 500 scientists and 1300 engineers with relevant training and skills, according to a 1968 UN study...."a United Nations study conservatively estimates that at least 500 scientists and 1300 engineers are needed to develop and maintain warhead production facilities, and an additional 19,000 personnel (more than 5000 of them scientists and engineers) are required to produce delivery vehicles of the intermediate ballistic missile variety"

Let me suggest that you read a recent book titled "Eating Grass: The Making of the Pakistani Bomb" by Feroz Khan to understand the basic fact that Pak nuclear weapons program has been a great catalyst for building national human capital and industrial base in the country.

As to Bangladesh, it is a newbie when it comes to nuclear power generation while Pak already has multiple nuclear power plants with lots of experience.

Pak has even built two indigenous nuclear reactors at Khushab entirely on its own. Two more are under construction now.

And Pakistan will find a way to generate more energy from various sources...the current PAEC plan is to build 8,800 MW nuclear power plants capacity by 2030.

KARACHI - Pakistan’s gas requirements are growing hastily, while the domestic gas production is not growing at the same pace. Primary energy consumption in Pakistan has grown by almost 80pc over the past 15 years, from 34 million tons oil equivalent (TOEs) in 1994/95 to 60 million TOEs in 2010/11 and has supported an average GDP growth rate in the country of about 4.5pc per annum.

Consumer Rights Commission of Pakistan (CRCP) in collaboration with Citizens’ Voice Project hold policy dialogues on “Role of Government and Regulators in the Gas Sector of Pakistan” with parliamentarians, policy makers, regulators and civil society organisations here on Wednesday.

CRCP recommended Effective Governance & Regulation for development of Gas Policy in dialogue.

The present natural Gas crisis clearly indicates that overall governance of the gas sector needs improvement. The growing energy shortages have made life difficult for Pakistanis across the board. The quality of life of citizens has deteriorated.

Dialogue reported that economic growth rates have been stunted, and industry and agriculture have suffered. The Government of Pakistan has not yet recognising magnitude of crisis and its effect on the people and the economy. Government has to take emergency measures to address, manage and reduce the impact of crisis. The reasons for present crisis in gas sector have both technical and governance aspects.

The dialogues have given comprehensive insight into the current situation of transparency, public participation and accountability processes in gas sector of Pakistan. The intervention is likely to result in enhanced understanding of the sect oral issues for the stakeholders.

Most important of all, it is expected to inform the policy makers and especially the public representatives about the governance situation of the sector and shall persuade them to take positive actions for sectoral improvement. In Pakistan, industrial and fertilizer sectors are getting gas on subsidised rates, while the CNG stations were being subjected to an exorbitantly high tariff regime, neglecting the general public’s interest. The gas consumers’ woes could not be resolved unless Pakistan had an autonomous regulator free of political interference. Besides, the problems could not be resolved without improving people’s access to information, putting in place a system of strict penalties on consumers involved in gas pilferage and non-payment of gas bills

...Asif Ali Zardari, Pakistan’s president, unexpectedly cancelled a trip to Iran at the last minute in December, amid concerns in Islamabad over stiff US opposition to a project considered essential for tackling mounting energy shortages. Some Pakistani officials had expected Mr Zardari to consent to the project during the trip.

The plan would see Pakistan build a pipeline connecting its national gas supply grid in the southern Sindh province to the Iranian border in southwest Baluchistan. Iranian officials say they have already built the pipeline on their side of the border to within 100km of Pakistan.

The US has opposed the pipeline on the grounds it would inject foreign exchange into the Iranian economy at a time when western countries have imposed a number of ever tighter sanctions in an effort to prevent Tehran from advancing its nuclear weapons programme.

Independent economists said it was too early to predict whether the project would go ahead. “The companies involved from Pakistan may face the danger of being exposed to US-led western sanctions,” warned Sakib Sherani, an economist. “There are also technical issues in undertaking such a large project.”

However, Islamabad has become all too aware of the political and economic risks posed by chronic electricity shortages after people took to the streets in cities across the country last summer in protest at power cuts up to 20 hours long.

Pakistan appeared confident the US would not hit it with tough sanctions, according to a senior western diplomat in Islamabad. “In their [Pakistan’s] calculus, they believe that the US needs Pakistan to ensure a successful drawdown from Afghanistan by December next year,” the diplomat said.

“The Pakistanis probably believe there will be a lot of huff and puff but no painful sanctions. In all honesty, Pakistan has a terrible situation on energy and these [energy] shortages can undermine the country’s stability.”

Iran has offered its neighbour at least $500m to help finance the project. The money was “just the beginning”, the Pakistani official said. “The Iranians have said they will provide more funding for this project if there is a need.”

The Iranian pipeline offers Pakistan the shortest supply route from any gas surplus country, officials say. Asim Hussain, chief adviser on oil and natural resources to the government, told the FT last December: “It’s a feasible project for Pakistan. It’s the quickest route, the cheapest route where we can fulfil our energy needs.”

On January 30, Pakistan’s cabinet ratified a $1.5 billion agreement with Iran for the laying of nearly 500 miles of pipeline in Pakistan that would connect the country’s gas infrastructure to Iran’s massive South Pars natural gas fields. The pipeline would potentially add over 750 million cubic feet of gas per day to Pakistan’s grid at a time when the country faces crippling energy shortages with some cities suffering frequent protests against 20 hour-long power outages.

Iran offered cash-strapped Pakistan over $500 million in financing to lay the Pakistani section of the pipeline after several private and sovereign foreign entities backed out of the plan over fears of incurring U.S. ire for participating in the project (and when Pakistan refused to award contracts to some without bidding). The Iranians have offered even more funding if the Pakistanis demonstrate seriousness in going ahead with and completing the project. Pakistan, in return, has offered the contract for the construction of the Pakistani segment of the pipeline to an Iranian company called Tadbir Energy (Iran has already largely completed its section).

Tadbir Energy is an Iranian firm that “isn’t sanctioned by any foreign government,” and in July 2012, it made a bid to take over the failing Petit-Couronne refinery in France. The Iranian firm, however, is a subsidiary of the Headquarters for Implementing the Imam’s Directive (HIID), also known as the Imam Khomeini Foundation, an investment firm linked to Iran’s Office of the Supreme Leader. The European Union sanctioned the president of HIID, Mohammad Mokhber, in 2010 for his involvement in Iranian “nuclear or ballistic missiles activities.” Mokhber is also a member of the Sina Bank board of directors, sanctioned by the European Union for its close ties to the Office of the Supreme Leader.

It will be important to watch whether the conclusion of the pipeline agreement leads to further cracks in the U.S.-Pakistan relationship, especially at a time when the U.S. appears to be looking to Pakistan to help facilitate reconciliation in Afghanistan as the U.S. continues to draw down troops from the country. Former Secretary of State Hillary Clinton warned in March 2012 that “beginning the construction of [the] pipeline, either as an Iranian project or as a joint project, would violate [U.S.] Iran sanctions law.” For a time, it appeared as if Pakistan was sensitive to U.S. concerns over Iran and gave some indications that it may scrap or indefinitely delay the pipeline project due to U.S. objections. Pakistan appears now to have calculated that its short-term energy needs are too great, and the threat of U.S. sanctions not strong enough, for it to forgo the deal.

It will also be important to monitor whether Pakistan’s decision to cut a deal with the Iranians has a significant impact on loosening western sanctions on Iran and what sanctions or other fallout, if any, it may face for spurning U.S. entreaties vis-à-vis Iran and engaging with an Iranian company closely linked to already-sanctioned entities.

HWJ: "Here is an interesting article by two Pakistani researchers at Princeton on the issue of Nuclear Deals, Parity and Strategic balance:

http://alturl.com/axi5q "

Indo-US deal has fundamentally altered the South Asian nuclear landscape by leaving 8 India reactors out of IAEA safeguards. These 8 reactors are produci8g 100s of Kg of fissile material each year forcing Pakistan to produce more by stalling FMCT.

^^RH: "Indo-US deal has fundamentally altered the South Asian nuclear landscape by leaving 8 India reactors out of IAEA safeguards. These 8 reactors are produci8g 100s of Kg of fissile material each year forcing Pakistan to produce more by stalling FMCT"------

It's NOT what these 8 reactors ARE producING (current tense) that bothers our Khaki geniuses.

After all, that is precisely what the FMCT is designed to end. We could get all those 8 reactors to stop producing more unsafeguarded materials if the FMCT goes through.

What concerns our Khakis is the fact that, before the deal, all the 22 reactors (cumulative 5000 MW) produCED (past tense) 8000 kgs of unsafeguarded plutonium, which the Indians have ALREADY stockpiled for their fast-breeder program, but could easily weaponize without violating the FMCT.

So our Khakis refuse to sign the FMCT until either (A) India hands over their existing plutonium stockpiles for IAEA safeguards OR (B) We manage to build up our own unsafeguarded HEU (KRL) or plutonium (Khushab) stockpiles to catch up with India.

Once either (A) or (B) occur, the Khakis would be okay with signing the FMCT.

And this is why everyone is running around like headless chickens constructing more uranium enrichment facilities and building more PHWRs at Khushab.

But this race to build our stockpiles to catch up with India is a MISTAKE. It will never work. We will never be able catch up. I will leave you to think about why that is so....

So the FMCT, which ALL the other 64 countries (including BFF China) have agreed to, will never become a reality because it is consensus based and our Khakis will NEVER sign.

We will be standing, as the delegate said, in "MAGNIFICENT ISOLATION".

And from the vantage-point of our Magnificent Isolation we will watch as our economy goes down the tube even as our heads are held high.

Giving in to the pressure from an international lender, the government has reversed its decision on consuming domestic coal for power generation as the Council of Common Interests has approved using a blend of imported and Thar coal in power plants.

The move will pave the way for an early sanction of a $900 million loan by the Asian Development Bank that will go for the construction of a 600-megawatt coal-fired power plant at Jamshoro and for switching an existing 600MW power plant to coal.

According to sources in the finance ministry, further discussions on the $900 million loan will be held with ADB Director General of Central and West Asia Department Klaus Gerhaeusser, who was due to arrive on Wednesday.

During his two-day visit, Gerhaeusser will meet Finance Minister Dr Abdul Hafeez Shaikh and Water and Power Minister Ahmad Mukhtar. He will also hold meetings to review communication projects.

Prime Minister Raja Pervez Ashraf had placed a ban on imported coal-powered plants in a bid to encourage consumption of Thar coal in such projects. However, the ADB resisted the move and refused to extend loans for Thar coal-based power plants.

The bank was of the view that higher dependence on lignite would increase pollution, which was against the environmental policy of the lending agency.

Following the ADB’s decision, the federal government placed the case in a meeting of the CCI – a constitutional body headed by the prime minister with all chief ministers as members – on January 23. According to official documents, the CCI decided that “instead of using only Thar coal, a blend of imported and Thar coal will be used in the 600MW Jamshoro plant.”

In this meeting, Sindh Chief Minister Syed Qaim Ali Shah, who actively promotes mining and consumption of Thar coal, was also present.

CCI also decided that the Ministry of Water and Power would work out further details in deliberations with representatives of the ADB.

Apart from the ADB, the Japan International Cooperation Agency (JICA) has also expressed interest in constructing power plants in Pakistan, besides laying a power transmission lines from Thar to Matiari.

In the past many years, heavy reliance on furnace oil has disturbed the country’s energy mix. Against a one-third share of thermal power generation earlier, the ratio has increased to three-fourths. The recent emphasis on the shift to coal is aimed at tackling the runaway circular debt that has plagued the entire energy chain, forcing the government to spend billions of rupees every month to prop up the energy system.

According to a government official, it was not yet clear whether Pakistan will again take up the issue of financing the Diamer Basha Dam with the ADB director general.

However, he said these days the dam, costing $11.3 billion, was not the top priority of the government, which has shifted funds meant for the dam to another project, the Neelum Jhelum hydropower plant. An amount of Rs1 billion has also been diverted to the PM’s discretionary funds.

Two nuclear power plants, 340 MW each, are under construction at Chashma and are expected to be commissioned by 2016, with Chinese assistance.Construction of these power plants became possible after a long-standing agreement, whereas three other nuclear power plants already commissioned in the country are performing well.According to official sources, a major chunk of the Pakistan Atomic Energy Commission (PAEC) budget has been allocated to the two plants. PAEC envisages production of 8,800 MW by the year 2030 through nuclear power reactors, sources added.“An amount of Rs 34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs 190 billion which will be partially funded by a Rs 136 billion Chinese loan,” said a source.The government has so far spent Rs 62.4 billion on the mega project having a 660 MW generation capacity. With Rs 34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013, an official said.According to an official in the Ministry of Science and Technology, the government is harmonising efforts made in the energy sector by different ministries, departments and research centres by creating an Energy Council including heads of relevant organisations.The council will be entrusted to advice on priority areas for Research and Development (R&D), management of resources and filling existing gaps.Acquisition of technology for building nuclear power reactors through R&D and transfer of technology agreements is also in consideration, the official said.

Here's a Dawn report on KESC's plans to invest $500 million in Karachi power infrastructure:

KESC would invest about $500 million for setting up of coal-based power plants, improvement in transmission and distribution systems in Karachi during the next five years, said Tabish Gohar, chairman, KESC board of directors here on Thursday.

A five-member KESC delegation briefed the Minister for Water and Power, Chaudhry Ahmad Mukhtar, on plans to improve power supply situation in Karachi.

Mr Gohar said that the Bin Qasim power plant would be converted on imported and local coal to generate 400MW cheaper electricity with an investment of $300 million.

The conversion plan would take almost 20 months to complete.

The KESC would spend $80 million on conversion of gas-based plants on combined cycle, while $80 million would be spent on smart grid station that would help improvement and transmission system.

The KESC chairman said that due to investment plan, the power system in Karachi would improve, and power thefts and line losses would be checked.

He also briefed the minister on outsourcing of some of its feeders and future plans to meet the electricity requirements.

Advisor to Prime Minister on Petroleumand Natural Resources Dr. Asim said that Pakistan offers great potential in the oil and gas sector and the government is doing its part by introducing new policies to meet the rising energy demand .

He was presiding over a seminar organized by the Petroleum Institute of Pakistan (PIP), a representative body of the oil and gas industry, on the topic "Shale Gas Potential in Pakistan" on Saturday.

The purpose of holding this seminar was to create awareness aboutpotential and challenges of shale gas in Pakistan and establish PIP'sprofessional standing in view of assisting the government on dealing with the energy crises in the country.

The forum consisted of 150 distinguished guests from the oil and gas fraternity including government officials, media personnel and students from Karachi's top universities/colleges.

Dr. Asim Hussain said he has been advocating the need to balancecountry's energy mix, which currently is heavily dependent on natural gas.

He stated that the US Energy Information Administration have estimated 51 TCF Shale Gas Reserves in Pakistan, while as estimated reserves for Low BTU Gas are 2 TCF and that of tight gas are 40 TCF.

He added that Shale Gas exploration is high technical and costly, therefore, in order to encourage its exploration, pilot projects are planned.

The Ministry of Petroleum and Natural Resources will facilitate E&P Companies wishing to explore shale gas, by granting special concessions through transparent process and based on merit.

Chairman PIP Asim Murtaza Khan stressed on PIP's role as an effective energy sector advisory body, supporting government and industry in Pakistan todevelop a progressive and sustainable roadmap to meet present and futurechallenges.

He said that PIP is planning to hold series of seminars in nearfuture. The big ticket items that will be discussed and which need theimmediate attention will be the "LPG Outlook in Pakistan", "Fast-trackingimports of LNG", "Refining Vision 2020", "Energy conservation" and"Restructuring of the Pakistan's gas sector".

Here's a news report on Pakistan's official position on Kishanganga arbitration results:

Islamabad: Downplaying the recent verdict by International Court of Arbitration upholding India's right to divert water from the Kishanganga hydro project, Pakistan said on Tuesday it was not a legal defeat for the country. Presidential spokesman Farhatullah Babar said that the arbitration award was not a legal defeat for Pakistan.

He said that Pakistan had put two questions of legal nature before the Court of Arbitration which were within its jurisdiction for determination. "The Court has given its conclusive determination on one question while on the second the final award will be given later in December".

The two questions, he said, were first whether India's proposed diversion of water from Kishanganga into another tributary breached the Indus Water Treaty and second if such a diversion was allowed whether there were limits on the quantum of water diversion.

Babar said that on the second question the Court categorically stated that the treaty did not permit reduction below dead storage of the water level in the reservoirs of run-of-river plants on the Western Rivers and India could not even flush water to such an extent that would deplete it dead storage level.

This condition applies not only at Kishanganga but for all future run-of-river hydroelectric plants according to the court award, he said.

He said this clear interpretation prohibiting India from depleting water below the dead storage level is a major relief for Pakistan as it protected the country's right to receive uninterrupted water supplies on the western rivers. "The uninterrupted flow, as much as the quantum, of water was critical for crops as delayed flows have seriously undermined crops in Pakistan due to late sowing," he said.

"The award had protected this right of Pakistan," Babar said.

Babar said that India has planned 150 run-of-river power plants on the western rivers of which 47 are above 50 MW's which made this particular decision very significant for Pakistan.

"Without such clear direction by the Court, the construction of these storage-oriented power plants by India, in the manner it has been seeking to build in the past, could have seriously undermined Pakistan's right of uninterrupted water flows from the western rivers," he said.

"Therefore while water may be diverted for power generation the power is to be constructed and operated in a manner that ensures a constant minimum flow of water in the Kanchenjunga/Vellum River".

He said that for determining of minimum flow regime the Court has asked both India and Pakistan to provide flow data and other details. A final award will be given later in December and in this context the decision was not yet conclusive, he said.

KARACHI - The Sindh Engro Coal Mining Company (SECMC) and Government of Sindh broke ground on Thursday to mark the beginning of coal extraction project at Thar Coal block II.Sindh Chief Minister Qaim Ali Shah attended the groundbreaking ceremony, along with the other government officials and Senior Management of Engro Corporation, says a statement issued by Engro Corporation. Sindh Engro Coal Mining Company is a joint venture between Engro Corporation and Government of Sindh. The SECMC has completed the feasibility study on Thar Coal project, confirming the technical, commercial and environmental viability of the project.All the required government approvals have been obtained and the Economic Co-ordination Committee (ECC) has approved $700 million sovereign guarantee for the project. The mining project, which will cost US$ 1.3 billion, is likely to start later this year and is expected to take less than four years for completion. Speaking the occasion, Ali Ansari - President and CEO Engro Corporation said, “For over four decades Engro has been a part of Pakistan’s economic landscape sharing the various challenges and triumphs that the country has offered.As a good corporate citizen, our investments in Thar Coal project today are a preliminary step towards building the capacity, which will foster a more developed and energy-efficient Pakistan. Investments in Thar Coal are not only the need of the hour but also make sound economic sense.” On the occasion, Shamsuddin A. Shaikh - CEO Sindh Engro Coal Mining Company said, “Thar has an enormous energy potential. SECMC’s Thar Block-2 can produce 4000 MW for next 50 years. Total foreign exchange savings for 4000 MW of Thar coal based power plants are estimated at more than US$ 50 billion for life of the project.The strategic investment and development of the Thar Coal Block II will not only help alleviate the chronic energy crisis of the country but also usher in a new era of prosperity for the people of Sindh and ultimately the people of Pakistan.The project will yield 4,000 new direct and indirect job opportunities for the local community. The SECMC applauds the support and efforts of the Sindh Government and reiterates its firm commitment to fulfil all its obligations in a timely manner, which will bring energy security to Pakistan and accelerate the industrial development in the country.The Engro Corporation Limited is one of Pakistan’s largest conglomerates with businesses ranging from fertilizers to power generation. Currently Engro Corporation’s portfolio consists of seven businesses, which include chemical fertilizers, PVC resin, a bulk liquid chemical terminal, foods, power generation and commodity trade.

Following a lacklustre period of several years, when things remained quite on the oil and gas exploration sector, in the face of heightened security situation and circular debt issues, the oil and gas fields have started to buzz with activity.

In the current financial year-to-date (July 1, 2012 to March 11, 2013) the country’s oil and gas sector has spudded as many as 56 wells. It represents a big leap over the 31 wells drilled in the same period last year. The sector has drilled 20 new exploratory wells as against 12 wells same time last year, depicting a significant increase of 67 per cent.

On the discovery side, the picture was a lot brighter than the earlier years as a total of 10 discoveries have been made by the sector in FY13 so far.

The sector’s drilling of a total of 56 exploratory and development (E&D) wells during the period also represents achieving 61 per cent of the full year target set at 91 wells. Even in that sphere, the sector fared better than the comparable period last year when only 41 per cent of the target 76 wells could be drilled.

“O&G sector’s focus continues to remain on the development wells”, says Nauman Khan, analyst at Topline Securities. Of the total wells drilled, 36 were development wells (representing 64 per cent of total activity). It reflected improvement over 19 wells or 61pc of total wells drilled in the comparable period last year.

Apart from the development wells, the activity on the exploration side also represented encouraging growth. Although, contribution of the exploratory wells had slightly declined to 36pc as against 39pc in the same period last year, the overall trend was heartwarming.

The sector spudded 20 exploratory wells, which was significantly more than 12 wells drilled in the comparable period last year while it represented 45pc of full year target of 44 wells.

Analyst said that amongst the listed companies, Pakistan’s largest oil and gas explorer, the Oil and Gas Development Company (OGDC) had drilled 13 wells which were 63 per cent higher than eight wells drilled last year. Included in those 13 wells, were two exploratory wells and 11 development wells.

Pakistan Petroleum Limited drilled five wells (one exploratory and four development), up from two development wells in the comparable period last year. However, with full year target of 16 wells (six exploratory and 10 development), sector watchers expect the drilling activity of the company to significantly intensify in the remaining of the year.

The third major oil and gas E&P company, the Pakistan Oilfields Limited drilled only one exploratory. In the comparable period last year, POL had drilled two exploratory wells.

Though much of the success eluded the E&P companies on the listed sector, the revival and discovery would benefit the country. The darkest hour for the sector came possibly in late 2010 and early 2011, when exploration and development work had started to limp.

According to the data compiled by Pakistan Petroleum Information Services (PPIS), 28 E&P companies in the country, that hold operator licences, together had drilled only 19 wells in first half of the year 2011, compared to 80 wells targeted for all of the FY11.Besides the poor security situation, the two major reasons for the underperformance of E&P companies were the nagging circular debt, which had affected the drillers’ liquidity thereby restricting their drilling portfolio and secondly, the continuation of the carry over wells of the earlier year that stalled companies from launching into new wells, keeping them focused on already drilled ground.

.Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan are all rich in oil and gas. According to available data, they have a combined 8.2 billion tons of proven oil reserves and 8.4 trillion cubic metres of natural gas reserves.

On the other side, South Asia faces a deficit in energy, rapidly picking up on economic growth. Connecting South Asian energy consumption centres to energy-rich Central Asian states is a win-win solution. It can bring economic growth to Central Asia through oil and gas revenues, and it can help South Asia continue on the path of stable economic growth and prepare the subcontinent as a future consumption market, which can support trade needed to sustain G-8 countries at the present level.---------

At the moment, three principal gas pipelines can bring gas to the subcontinent. These are the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI), the Qatar-Pakistan-India (QPI) submarine gas pipeline, and the Iran-Pakistan-India (IPI) gas pipeline. The QPI, for a considerable portion, has to be laid down in the seabed of the Arabian Sea. The option, at present, is too expensive to be adopted. Even after completion, its estimated annual maintenance cost is a considerable portion of the profit margin, and the host consortium may not find it feasible to run.

A Memorandum of Understanding (MoU) was signed on March 15, 1995, between Turkmenistan and Pakistan to build a gas pipeline from the Daulatabad gas field in Turkmenistan to Multan in southern Punjab. US company Unocal, in consort with Saudi oil company Delta, prepared to start work on the project. The two companies later joined the CentGas consortium in which several international petroleum companies joined in, including Russian petroleum giant Gazprom.

Later on, in June 1998, Gazprom relinquished its share in the project, while Unocal withdrew in August 1998 after attacks on American Embassies in Nairobi and Darussalam. The project was then put on the backburner.

----

The $7.6 billion pipeline, with initial capacity of 27 billion cubic metres of natural gas per year, will deliver 2 billion cubic metres of gas to Afghanistan and 12.5 billion cubic metres each to Pakistan and India.

IPI

The proposed pipeline was designed to bring gas to Pakistan and India. The pipeline can initially supply 22 billion cubic metres of natural gas per year, which was expected to be raised later to 55 billion cubic metres per year. The project was supposed to be commissioned by 2013 (this year) at a cost of $7.5 billion. After reaching Multan, a spur line had been proposed, which would deliver gas to India. Under the gas purchase agreement, Pakistan was supposed to get gas at a price of $11 per million British thermal units (MMBTU). The price is $2 per MMBTU cheaper than the TAPI pipeline gas, which costs $13 per MMBTU. The Iranian gas is also $7 per MMBTU cheaper than imported LNG.

In 2008, after signing a civilian nuclear deal with the US, India withdrew from the project.

Pakistan’s federal government in January this year has approved a $1.5 billion government-to-government deal with Iran for laying the 785-kilometre segment of the pipeline in Pakistan. The federal cabinet has finally approved the project, and a special committee has been formed to expedite it. The US has been quick to register its concerns over the deal.

South Asian consumption

In Pakistan per capita natural gas consumption in 2010 was 229 cubic metres, whereas in India this is as low as 55 cubic metres..

Here's Express Tribune on private sector jumping in to add power generation capacity:

After five years of unbearably long daily power outages, Pakistan’s private sector has had enough: over the next five years, they plan on investing over $14.3 billion in increasing the nation’s power production capacity by nearly 46%, and they are doing so by investing in the cheapest possible sources of electricity.

According to data released by the National Electric Power Regulatory Authority (Nepra) in its 2012 State of the Industry report, private sector firms have already begun work on dozens of projects that would substantially increase the country’s electricity generation capacity. For the purposes of this special report, we include only those projects that are scheduled to be completed by the end of the next administration’s term in 2018.

If the next administration were to do absolutely nothing to prevent or slow down the progress currently being made on projects that are already approved and progressing, Pakistan’s power generation capacity will increase to 34,200 megawatts (MW), compared to the approximately 23,500MW today. Of that increase, more than 80% is coming through private sector initiatives.

Yet it is not just the private sector’s initiative that deserves to be applauded: it is also their foresight. Nearly all of the private sector projects scheduled to come online use the cheapest fuels possible. These firms are scheduled to add about 4,900MW to the nation’s hydroelectric power generating capacity, for example. Another 800MW will be added in terms of gas-fired thermal power plants. And nearly 3,000MW will be added or converted to coal and bagasse (a waste product from sugar manufacturing).

Residents of Karachi should rejoice in particular: the Karachi Electric Supply Company is converting 840MW of oil-fired thermal power stations to coal, which will dramatically increase the country’s only private utility’s ability to generate cheaper electricity. Put simply, this will mean even fewer power outages in Karachi.

The private sector’s focus appears not only towards fuel sources that are cheap, but also easily available. Natural gas, for instance, is possibly the cheapest source electricity, cost an average of Rs4.24 per kilowatt-hour, according to Nepra. But the bulk of the investment is going towards hydroelectricity, which, according to Nepra’s tariff determination, is expected to cost Rs5.43 per unit for the first 12 years of a project’s life, while the debt used to finance the plants is still being paid off, following which the tariff will be reduced to Rs2.47 per unit.

The preference for hydroelectricity has to do with the fact that Pakistan’s natural gas reserves are rapidly being depleted and importing gas is far more difficult than importing coal. Power plants that run on imported coal can produce electricity for an average of Rs10 per unit, according to industry experts, much cheaper than the Rs16 per unit that oil-fired thermal plants cost.

Compared to the $14.3 billion being invested by the private sector, the government is planning to invest just over $2.5 billion over the next five years to upgrade its power infrastructure, which will add about 2,100MW of electricity generating capacity over the next five years, the overwhelming bulk of which will be in thermal power plants that can run on both oil and gas.

The picture, of course, is not completely rosy. Power projects are notorious for not meeting their deadlines so it is possible that the next administration will not see all of these projects come to fruition during its term. But given the private sector’s commitment to solving Pakistan’s energy problems, the least the government can do is not create hurdles in their way. It will only help their own re-election chances.

Here's a PakTribune report on lack of budget allocation for power generation in Pakistan:

Not a single penny has been allocated in federal budgets for power generation for the last 19 years despite unprecedented electricity loadshedding in the country.

This was stated by former managing director of Pepco, Engineer Tahir Basharat Cheema, while addressing a seminar on “Pakistan power sector: past, present and the future” held here at Pakistan Engineering Congress on Wednesday.

Stressing the need for higher budgetary allocation to meet rising power costs, he observed that no government has allocated any fund in national budget for electricity generation after 1994.

“The National Highway Authority was given Rs92 billion in current budget while Rs16 billion was allocated only for a single constituency and if this amount was given to power sector that would have gone a long way in eliminate power loadshedding.” Cheema, who is presently heading an Energy Management Committee of the Ministry of Water and Power, stated that government's seriousness to control power crisis can be gauged by the fact that it allocated a minor amount of Rs15 billion for power sector but that was not released either and diverted to some other project.

“In order to tackle the energy shortages, maximum funds should be allocated for construction of dams or water reservoirs, besides tapping of Thar Coal, completion of Iran-Pakistan gas pipeline, energy conservation & energy efficiency, fuel mix and energy rationing.”At least Rs50 billion of the total budget should be allocated for hydel power projects, he stressed.

Reliance on costly thermal power has been jacking up the cost of production and the import bill as well. “The country is in dire need of an urgent shift in its energy-mix in favour of hydel power and local fuels. Use of biogas should be promoted throughout the rural sector both for electricity generation and gas for cooking besides producing bio fertiliser, said the power sector expert.He expressed that 175 billion tons of Thar coal reserves with a price tag of $13 trillion in the international market are enough to provide 100,000MW of electricity for 100 years. Uninterrupted and affordable power supplies can turn Pakistan into an economic powerhouse. While expressing the optimism for construction of Kalabagh Dam, he said that Sindh needs fresh water the most and it is the KBD, which would fulfill its dire need of fresh water..

The current acute energy crisis in Pakistan, certainly the worst of all times is heating up an indigenous extractive resource scramble in a remote part of Pakistan with unusual demographics. The Tharparker District or simply the Thar Desert located in the southeastern province of Sindh is under spot light because of a 175 billion tons of estimated coal reserves lying beneath its surface. These reserves have been known for around two decades, but only recently has development gained momentum to generate power in order to propel the country’s ailing economy. The signs of a resource boom are already animating the dull landscape of the region – roads, airports, site offices, power lines, guest houses and rising real estate price are evident. Near the town of Islamkot, an underground coal gassification pilot project represents the scale of possible change where workers sourced from local communities rest their heads after long-hour shifts.

Understanding the quandary faced by the residents of the Thar Desert took me to several villages situated in the vicinity of the coal fields to gather some basic ethnographic data on community perceptions of the project. Tharparker is home to around 1.5 million people stretching its boundaries with Indian Rajasthan and the Great Ran of Kutch salt marsh. The indigenous communities of Menghwar, Kolhi and Bheel make up a large part of the rural human settlement. The land is famous for rippling sand dunes, distinct folklore, rain-starved shrubs, drying wells, bottomed indicators of health, poverty and education and the most food insecure district in the country. One of the villages Mauakharaj of Tharparker, just beside an airport being built to host coal companies, has abject poverty and deprivation. The whole village is culturally and socially crippled because of fluorosis; a disease caused by consumption of excessive fluoride in groundwater, with no remedy and still people compelled to use it.--------------The conversation did not lead to consensus on what approach should be dominant but there was a agreement that Thar coal development should not be a first resort but much further down the priority scale for addressing Pakistan’s energy crisis. As Pakistan’s election approaches, energy is a ballot issue and polemics are rife on panacea solutions. It is high time that Pakistanis consider their energy predicament with a multifaceted strategy that transcends petty nationalism so that communal harmony is not compromised for short-term and inefficient power solutions.

Energy and Security: Natural Gas and the Example of PakistanBy Paul Sullivan,Georgetown UniversityI recently got a question the other day about Pakistan. It is having a serious electricity crisis. One of the solutions proposed to me was that a pipeline be built from a neighboring country, Iran, which has a lot of natural gas in order to fuel the power stations of this South Asian state.Fuel is not enough.The electricity generating stations in Pakistan need to be better maintained. Many plants are simply not running due to bad maintenance. More people need to be paying their electricity bills. The pricing of electricity needs to be more rational. Without the right amount of payments coming into an electricity company, even if it is a public sector company, the company cannot remain solvent and well run for long. Pakistan’s electricity is produced by two public sector utilities and about 20 plus independent power producers.Part of the problem with this in some developing countries is that in the villages and even the large cities one can see thousands of “informal” wires being connected from the electrical poles to houses and businesses without any meters (or even safe connections, but that is another story). Income losses from essentially stolen electricity are gigantic.Pakistan’s electricity demand growth of about 10-11 percent per year is overwhelming its supply of electricity.About 55 percent of Pakistan’s people use biomass, such as cow dung, other agricultural waste, garbage and more to heat, cook, etc. These people will likely have an increasing want for electricity connections in the future. Pakistan will not develop even near to its potential if this huge proportion of its population is not connected with electricity, either on a grid or via distributed energy systems at the village and town levels.These distributed systems could use the vast wind, solar, geothermal and other renewable energy resources available, but severely underutilized in the country. Setting up distributed power systems in villages and small towns could also prove to be a lot cheaper than extending Pakistan’s often shaky and overused grid....

Here's a McClatchy report on Sharif allocating no money to Iran-Pakistan gas pipeline:

Pakistan’s newly elected government Wednesday unveiled its first budget, which gave the go-ahead for buying two new nuclear power plants from China but made no allocation for a long-proposed natural gas pipeline from Iran that had sparked complaints from the United States.

In not budgeting for the Iranian pipeline, agreed to by his predecessor in February, Prime Minister Nawaz Sharif tactfully sidestepped a potential diplomatic clash with the United States, which had warned that the pipeline, if it were ever built, could lead to sanctions on Pakistan. The deal also was criticized as a trap for the new administration by Sharif’s brother and de facto deputy, Shahbaz Sharif, the chief minister of Punjab province.

The $35.5 billion budget, which was presented to Parliament by the new minister for finance, Ishaq Dar, suggested that the new government would follow through on Sharif’s plan to resolve the country’s power shortages that Dar said had cut the country’s economic growth by 2 percent in the outgoing fiscal year, which ends June 30.

Dar’s budget would switch Pakistan’s power generation plants from expensive imported fuel oil and gas to much cheaper coal sourced partly from undeveloped reserves in Pakistan’s southern Sindh province. The rest probably would come from huge mines in India, Pakistan’s traditional foe, with which it has fought two wars since both gained independence from Britain in 1947.

The South Asian neighbors opened talks Tuesday about the planned import of Indian electricity via cross-border cables near the eastern Pakistani city of Lahore.

The budget also sets aside about $430 million for new nuclear power plants from China, a project that the United States and India have both objected to at meetings of the Nuclear Supplier Group, one of the international groups that attempts to prevent nuclear proliferation. But Pakistan insists that the plants are unconnected to the country’s nuclear weapons program and are regularly inspected by the International Atomic Energy Agency. Pakistan possesses between 80 and 120 nuclear weapons, according to estimates by Western analysts.

A Cabinet minister, speaking to McClatchy on condition of anonymity because he was not authorized to discuss the project with a reporter, said the Iranian gas pipeline hadn’t been altogether dropped, largely because that would invoke a penalty payment to Iran. Instead, he said, Pakistan’s new government would procrastinate by trying to haggle lower prices from Tehran, based on the comparison with coal.

Analysts also said Sharif could forgo the Iranian pipeline because of the prime minister’s good relations with Saudi Arabia. Sharif spent six years in exile in the Persian Gulf kingdom as part of a deal for his release from jail in Pakistan negotiated by the Saudi royal family, after he was overthrown in a military coup staged by Gen. Pervez Musharraf in October 1999....

The Pakistani government said it expects to discuss the possible extension of a natural gas pipeline from Iran during talks this week with Chinese officials.

Pakistani Petroleum Secretary Abid Saeed said the project could be completed by the end of next year. He said Pakistan will receive 750 million cubic feet of natural gas from Iran each day through the pipeline once all operations are completed.

India has been included as potential partner in the pipeline. The U.S. government favors a rival project planned from Turkmenistan through Afghanistan, Pakistan and India.

Pakistan hosted Chinese delegates Monday to discuss extending the Iranian pipeline through to western China, the Press Trust of India reported.

Both sides are expected to review options for oil links as well, the Indian newspaper said. Pakistan's aging infrastructure and energy sector mismanagement has left most the country without a reliable source of electricity.

Islamabad said a looming energy crisis in the country is a greater threat than terrorism. India, meanwhile, relies on natural gas imports because it lacks the infrastructure necessary to take advantage of its own reserves.

Chinese economic expansion is such that its energy demands are outpacing the rest of the world.

Here's a WSJ story on Pakistan buying two more nuclear reactors from China:

Pakistan is acquiring two large nuclear power reactors from longtime ally China, officials said, in a $9.1 billion deal that has raised concern in Washington that Beijing is overstepping international rules on transferring nuclear technology.

For Islamabad, the pact with China counters the nuclear energy accord New Delhi signed with the U.S. under then-President George W. Bush. Pakistan regards that arrangement as providing India with an unfair potential strategic advantage for nuclear weapons. Both countries possess a nuclear arsenal.

There is unease in the U.S. and elsewhere over the security of sensitive facilities in Pakistan, where Islamist militants have shown they can attack even the most heavily guarded installations, analysts said. There is also concern the Chinese are willing to circumvent rules locking out countries from nuclear trade if, like Pakistan, they aren't part of to the nonproliferation treaty.

Pakistani officials haven't talked publicly about this latest agreement, which was quietly signed around midyear and closed in early July.---The reactors covered by the deal would be technologically advanced and built outside the main port city of Karachi. They each would provide 1,000 megawatts of electricity, a big boost for power-starved Pakistan. "Every country has this. We are also entitled," the senior official said. "We have to focus on adding cheaper energy supply."

China would deliver the first reactor in 70 to 80 months, with the second coming 10 months later. Nuclear reactors take several years to build. They would be installed on the Karachi coast close to a small existing reactor, the senior Pakistani official said. The Chinese will provide 82% of the financing through a loan on what another Pakistani official described as very soft terms.------------

With the 2005 U.S.-India Civil Nuclear Agreement India, which also isn't part of the nonproliferation treaty, won an NSG exemption to buy nuclear power technology. But legal complications have subsequently stalled the anticipated sale of American nuclear plants to India. These obstacles include the liability for compensation for accidents that now exists under Indian law, following the deadly 1984 accident at a chemical plant owned by Union Carbide, a U.S. company, in the Indian city of Bhopal. But Pakistan has objected to the pact.

Still, Pakistan, which is in a nuclear arms race with India says that accord was discriminatory. "The U.S.-India nuclear deal was very disturbing for the strategic stability of this region," said Sarwar Naqvi, a former Pakistani ambassador to the IAEA. "It put Pakistan at a disadvantage. It freed Indian uranium to be diverted to their military program."

Carnegie Endowment's Mr. Hibbs said that the design of the new 1,000-megawatt reactors that Pakistan will receive is untested, even in China. He added that the price tag doesn't suggest that Islamabad is getting any "bargain." There wasn't competitive bidding on the project.

-----As part of his speech to the United Nations General Assembly last month, Prime Minister Sharif called for Pakistan to be allowed to join the Nuclear Suppliers Group. "Pakistan qualifies for full access to civil nuclear technology for peaceful purposes, to meet its growing energy needs," Mr. Sharif said.

“The beginning of the 2,200-megawatt power project is indeed a proud moment in the energy history of Pakistan,” Mr. Sharif said at the groundbreaking ceremony in the coastal city of Karachi, which the Chinese ambassador to Pakistan, Sun Weidong, and officials from Pakistan’s Atomic Energy Commission attended.

“For achieving the goal of energy, nuclear power will form an increasingly significant component,” Mr. Sharif said, adding that he was told by the Chinese officials that the project, Karachi Coastal Power Project (K-2/K-3), will be completed in six years.----------The cost of the new reactor project is estimated to be $9.59 billion, with China providing extensive construction help and expertise. Further, China will provide maintenance and enriched uranium for fuel.

---

China has signaled its intent to expand nuclear energy cooperation with Pakistan in joint statements from their leaders, Mr. Zhang said in a telephone interview.

“Both countries have expressed their willingness to expand cooperation in civilian nuclear energy,” he said. “In that sense, you didn’t need a crystal to see this project coming.”

China is almost certain to deem the new projects as a “grandfathered” extension of nuclear cooperation agreements signed with Pakistan before China joined the Nuclear Suppliers Group, meaning that China will not consider seeking approval for the reactors from the group, Mr. Zhang said. He said the major member states in the group, including the United States, also appeared unlikely to go beyond relatively restrained, formulaic expressions of concern about the new reactors.

“My analysis is that this issue won’t trigger too much controversy,” he said. “The Indian government will certainly respond, but I don’t think that this will fundamentally harm Sino-Indian relations, because it’s not something that has come out of the blue. China and India have exchanged views on this many times.”

On the supplier group’s likely response, Mr. Zhang said: “I don’t think the N.S.G. will formally raise this issue, because the experience in the past was that the members would reach an implicit understanding, and so this issue never caused a big fuss in previous N.S.G. meetings.”---“China’s supplies to Pakistan are under full I.A.E.A. safeguards,” said Mansoor Ahmed, a Pakistani analyst who is a visiting research scholar at the Cooperative Monitoring Center, Sandia National Laboratories, in Albuquerque, N.M. “However, the Chinese have chosen to ignore criticism with regard to the N.S.G. restrictions, which are subject to various interpretations, in view of the India-U.S. nuclear deal.”

Mr. Ahmed also stressed that the two reactors were being sold under a civilian nuclear cooperation framework concluded in 1986 before China becoming a party to the Nuclear Nonproliferation Treaty in 1992 and the N.S.G. in 2004. “Therefore, the Chinese don’t need N.S.G. approval for the sale of new reactors in spite of Indian protests,” he said.

Mr. Sharif on Tuesday also announced plans to build six more civilian nuclear plants in other parts of the country. But Mr. Zhang said that China was unlikely to build any more nuclear reactors in Pakistan beyond the two units in Karachi.

The choice of Karachi is significant as it is considered Pakistan’s economic and trade center. “Today people look with envy toward cities like Dubai, Hong Kong, Kuala Lumpur and Singapore,” Mr. Sharif said in his speech, which was broadcast live on state-run television.

The Asian Development Bank (ADB) is providing a $900 million loan for a new supercritical coal power generation unit in Pakistan that will deliver reliable and cost effective electricity to hundreds of thousands of energy-starved households and businesses.The coal-fired generation unit, the first in the country to use supercritical boiler technology, will be built at an existing power plant in the town of Jamshoro in Sindh province, about 150 kilometres east of the provincial capital, Karachi.It will employ state-of-the-art emission control equipment resulting in cleaner emissions than the existing heavy fuel oil-fired generators and subcritical boiler technology, which is more commonly used, according to ADB statement issued on Monday.Pakistan only has 19 percent of the global average for carbon dioxide emissions per person and has only one coal-fired power plant in operation generating 0.7 percent of the generation mix.Recycling ash from the plant will also save about 115,000 tons of carbon dioxide equivalents per year, the statement said adding the electricity generated from the plant will alleviate some of the power shortages and replace generation from small individual oil and diesel generators which is expected to save a further 503,000 tons of carbon dioxide per year.The new plant will generate electricity at a lower cost saving about $535 million per year on its fuel import bill compared with oil fired generation.The new unit is a part of broader government efforts to decrease electricity tariff.Coal-fired power plants, using cleaner technology, provide an environmentally sound and cost-effective medium-term energy solution at a time when the country's natural gas reserves are dwindling.Resolving the energy crisis is a priority for the country and the government is pursuing all options including large hydropower plants, renewable energy, energy efficiency, increasing domestic gas production, and importing electricity and natural gas.Pakistan has substantial potential for large hydropower which will be developed to meet long-term energy needs because of the longer construction period involved.Small and medium sized hydropower will be developed to meet medium-term needs, it said adding the stable base-load power provided by this project will enable the fluctuating power from solar and wind power to be used without disruption to the grid.ADB's assistance, which includes $870 million from ordinary capital resources and $30 million from its concessional Asian Development Fund, will be complemented by cofinancing of $150 million from the Islamic Development Bank and counterpart funds of $450 million from the government.The project is expected to be completed by December 2018. ADB's assistance will also provide 5 years of operation and maintenance support after its completion.

Despite opposition by the United States (US), the Asian Development Bank (ADB) has approved a $900-million loan for converting the Jamshoro Power Plant to a coal-fired one, giving a boost to the government’s efforts to improve the energy mix.According to sources, hectic diplomatic efforts, launched by Finance Minister Ishaq Dar, saved the day for Pakistan after the US had indicated its opposition to the deal to the ADB’s Board of Directors. The US cast its vote against Pakistan, the sources said.However, Canada, Germany, Australia, New Zealand and Japan cast their votes in favour of Pakistan.The loan was approved by the ADB Board of Directors, according to Ministry of Finance. The project will have an installed capacity of 1,320 megawatts (MW) and will add 1,200 to the national grid.The new plant will generate electricity at a lower cost, saving about $535 million per year on fuel imports compared to oil-fired power plants.

Three-fourth of the board voted in favour of the loan, the finance ministry said. Dar also thanked the ADB and countries that supported Pakistan’s proposal, it added.The previous government had initiated the process of converting and running the power plant on imported coal.However, the PML-N government plans to construct coal power plants at Gadani with a total capacity of 6,600 MW as part of its policy of producing electricity on cheaper fuels like coal, Dar stated.According to the ADB, out of the total sum of $900 million, an amount of $870 million will be at a higher interest rate while $30 million will be at a concessional one. The Islamic Development Bank will also provide $150 million, while $450 million will be arranged by the government, to meet the total estimated project cost of $1.5 billion. The ADB said that project is expected to be completed by December 2018.While the ADB approves the loan, the Pakistani authorities have yet to sort out the actual price. After the Ministry of Water and Power overestimated it at $2 billion (Rs220 billion), the federal government had constituted a committee to review the cost, which had originally been estimated at $1.5 billion (Rs165 billion).The ADB said that in order to address environmental concerns, it will employ state-of-the-art emission control equipment resulting in cleaner emissions than the existing heavy fuel oil-fired generators and subcritical boiler technology which is more commonly used.Before approving the loan, the ADB had pressed Pakistan to agree to using imported bituminous coal for 80% of the plants fuel requirement, and Thar coal which is lignite and has a low heating capacity for the remaining 20%.

Here's a News story on US support and funding for Central Asia-South Asia (CASA) transnational grid:

WASHINGTON: The United States has committed $15 million in financing towards the Central Asia-South Asia electricity transmission project (CASA-1000) that on completion would help bring electricity to Afghanistan and Pakistan.

While announcing the funding the State Department expressed the hope that the US financial support for CASA-1000 would help leverage other donors to support the project and encourage the World Bank to present the project to its Board of Directors for final approval next year.

“We believe CASA-1000 can be a potentially transformative project, helping create a regional energy grid that connects Central and South Asia for the first time,” a statement released by the Office of the Spokesperson said.

When completed, CASA-1000 will allow Tajikistan and Kyrgyzstan to profit from existing, unused summer generation capacity by selling electricity to Afghanistan and Pakistan. Afghanistan would doubly benefit from the project as a consumer (300 MW) and as transit country generating revenue.

“Pakistan would add 1,000MW to its national grid during the summer months when it experiences its peak demand period and have access to a reliable, clean, and cheaper energy supply.”

According to the State Department, CASA-1000 is entirely dependent on existing hydropower generation so it will not affect water-sharing agreements for other Central Asian countries. It also complements ongoing efforts by the Asian Development Bank and others to support a regional energy grid.

“These types of projects can enhance economic interdependence and support peace and stability in the region for years to come. That is why the United States has been supporting the CASA-1000 Secretariat for several years, and is now committing an equity stake in the project.”

“US support for CASA-1000 is representative of our long-term commitment to peace, stability and prosperity for Afghanistan and its neighbours. CASA-1000 is a practical example of a project that supports regional economic connectivity and our New Silk Road vision. The United States looks forward to working with the World Bank, the Islamic Development Bank, and other development partners to support CASA-1000 and other projects which connect Central and South Asia.”

Following is the text of press release issued by Shell Pakistan Limited

Quote

Thailand, the Philippines and India top a list of nine Asian countries that say they are very concerned about future energy needs, amid increasing pressure for more energy, water and food to keep up with increased population growth.

The results emerged from a series of Shell-commissioned Future Energy surveys in which 80 percent of the respondents ranked longer-term future energy needs alongside everyday concerns like public education and cost of living as important. The surveys covered 8,446 people in 31 cities and 9 regional areas.

These concerns have arisen amid growing energy pressures globally. By 2030, the world will need 40% to 50% more energy, water and food in tandem with rising demand and increased populations. Tremendous stress will be placed on these vital resources as energy is used to move and treat water; water is required to produce energy and both energy and water are required in the production of food.

"It is encouraging to know that Asians view future energy needs as high priority, as this region will see one of the fastest growths in population and energy demand," said Jeremy Bentham, Shell's Vice President for Global Business Environment. "More than ever before, the industry, government and public all have a joint responsibility to create a better energy future, and must come together to collaborate and coordinate our efforts to meet these challenges for generations to come."

Most survey respondents expect energy shortages and higher energy prices to have a significant impact on their countries. Issues seen as most pertinent are energy shortages in Thailand (91%) and Pakistan (90%), higher energy prices in India (91%) and Singapore (79%), water shortages in Vietnam (89%) and food shortages in Indonesia (86%).

The surveys indicate that Asia is in favour of a mix of future energy sources, with solar energy and natural gas leading the way in many countries. Solar energy is the most desired future energy source across most countries, which include Singapore (86%), Thailand (83%) and India (77%). Natural gas is cited as the most preferred future energy source in Brunei (87%) and is second most preferred in Singapore (52%), Indonesia (43%) and India (43%).

Survey respondents agree that collaboration between industry, government, and the public, as well as innovation and incentives for cleaner energy, are the most important factors in shaping future energy needs. In Pakistan, over 50% of 2000 respondents, identified effective government policy as the most important factor in building future energy solutions.

Electricity-starved Pakistan is close to signing a deal with Qatar worth as much as $2.5bn a year for the supply of liquefied natural gas (LNG) from the Gulf emirate to fuel Pakistan’s power grid, according to senior officials in Islamabad.“This will be the last winter of discontent,” said Shahid Khaqan Abbassi, Pakistan’s petroleum minister, in a reference to the long power cuts that have for years angered Pakistani industrialists and householders. He promised a “major improvement” in gas supplies next year after particular severe shortages this winter.

Mr Abbassi is close to signing an agreement for the import of LNG from early 2015. Although the government has yet to name a supplier formally, Mr Abbassi and other officials from his ministry said that Qatar was the expected seller.“If we can provide gas to those of our power generation plants that run on gas, [electricity cuts] will go down by half,” said Mr Abbassi. Demand for natural gas in Pakistan, a country of 180m people, is estimated at 8bn cubic feet per day, double the amount produced locally from gas fields in the south of the country.Pakistan has also negotiated an agreement to buy gas to be piped from neighbouring Iran, but implementation of the project has been has been hampered by lack of financing and by US opposition.Mr Abbassi expects Pakistan to buy some 3.5m tonnes of LNG a year from Qatar, meeting only part of the country’s shortfall.Before the winter, Mr Abbassi alarmed his cabinet colleagues when he told them that for the first time in Pakistan’s history gas supply this year would not be sufficient to meet the needs of domestic consumers – even if supplies to commercial and industrial buyers were suspended.Nawaz Sharif, prime minister, ordered Mr Abbassi to “take emergency steps” to tackle the situation, according to a senior official working with Mr Sharif. “Failure to provide gas will only enlarge the political risk [to the government],” the official said.Growing energy shortages in recent years have prompted street demonstrations that only add to political instability in Pakistan.Some critics have questioned Pakistan’s ability to keep up with the payments for future LNG supplies given the country’s weak finances, although the gas would partly replace oil used for power generation. “That may spare foreign exchange and allow the authorities to pay for at least part of the gas imports,” said Sakib Sherani, a former finance ministry adviserThe discussions with Qatar have deepened uncertainty over an earlier plan by Pakistan to build a pipeline to the Iranian border to import gas from Iran’s South Pars gas field. Mr Abbassi refused to comment on that project, and said only that “Pakistan will need more gas even after the LNG project. We are looking at all possible avenues.”

Here's an Express Tribune report on Pakistan's commitment to civil use of nuclear energy:

Prime Minister Nawaz Sharif on Tuesday said that Pakistan intended to use nuclear technology in order to address the country’s severe energy crisis.Talking to Director General International Atomic Energy Agency (IAEA) Yukiyo Amino here at the Prime Minister House, the premier said Pakistan Atomic Energy Commission (PAEC) was helping the country to meet its power requirements with expansion of the Chashma nuclear projects and new nuclear power plants in Karachi.Terming the help of IAEA as key, Nawaz said Pakistan was making use of nuclear technology in several areas including power production, medicine, agriculture, food preservation and water management for the benefit of the people.The premier also assuaged fears of proliferation, reaffirming Pakistan’s commitment to nuclear non-proliferation (despite remaining one of the three countries to have never signed the non-proliferation treaty), adding that “all our current nuclear power plants as well as research reactors are under IAEA safeguards and all obligations are being fulfilled adequately.”Nawaz appreciated the positive role played by the Agency in the development of peaceful use of nuclear technology in Pakistan, for human resource development in various scientific disciplines and establishment of research and development facilities at different centers in the country.He said the government of Pakistan valued its relationship with IAEA and said this cooperation shall be strengthened in the time ahead.IAEA director general appreciated Pakistan’s commitment to use of nuclear energy for the benefit of its people and extended his support for the cause.

Here's a VOA report on the growing use of microhydro turbines for generating electricity at village level:

Many areas of Pakistan suffer energy shortages because the country's grid does not reach all of its remote corners. In one section of Pakistan's Kashmir region, people have taken the initiative to create their own energy from abundant streams and rivers, using small-scale turbines.

The Neelum Valley, in the Himalayan region of southeastern Pakistan, is sometimes called “Heaven on Earth” for its unspoiled beauty. Local residents want to preserve their forests and their clean environment despite a growing need for electricity said Shafiq Usmani, an official at a local hydroelectric board.

"All the beauty of the Neelum Valley is dependent upon those forests, streams, and neat and clean water, and this can only be sustained if we are giving them the clean energy," said Usmani.

Less than half of the Neelum Valley's 200,000 inhabitants have access to electricity from the national grid. However, the Neelum River itself and its tributaries flow with enough force to produce energy. Some local communities use small turbines, called hydel machines, to generate electricity to light their homes.

"This hydel machine [turbine] was installed with a share from 50 families, which costs us nearly $3,000. We started this small hydro scheme as we needed it. We only get light from it and no other electric appliances. We start this turbine at 3 in the afternoon and switch it off the next day at 8 am," said Rahimullah, one of the turbine operators.

Villagers say the homemade turbines have transformed their daily lives.

“When we had no electricity there was always smoke, as we use wood for heating and cooking, which causes diseases. Since we installed this project, thank God, we have gotten rid of these diseases and gained some other benefits," said Mushtaq Ahmad, a villager.

Even so, there is not enough energy for everyone's needs, and that means that trees still have to be cut down to provide wood for fire. Engineer Sardar Basharat Ahmad said the valley needs more turbines.

"Cutting down trees is a big loss, using wood for heating and cooking causes health problems. If the hydel is promoted and new projects are set up, it will fulfill all the requirements of the people like cooking and heating, and it will save the cutting down of green trees," said Ahmad.

Pakistan is plagued by power cuts, especially in the summer. The blackouts affect ordinary people's lives and hamper the economy. The country is using only about 10 percent of its identified hydropower potential.

Modi on petroleum exploration in Pakistan: Referring to the exploration scope in the region, he said Pakistan has started exploring the area across the border for gas and petroleum products.

"Look across the border in Pakistan, they have started massive work in gas and petroleum sector, why can't we?" he asked.

"It is the same region. There is immense scope for gas and petroleum here. I am sure we can definitely find it here as well. It can give new strength to our nation."

Addressing the youths, he said there will be opportunities in the exploration work in future and asked them to prepare themselves for it.

"We have started a petroleum university in Gujarat and this is for youngsters. I would urge the youth here to go on Internet and search about petroleum university. I invite you to make full use of it," he said.http://news.outlookindia.com/items.aspx?artid=836884

Pakistan’s first LNG terminal is finally on track to come onstream by early 2015, but whether the country can afford LNG imports is still in doubt, according to analysts.Houston-based Excelerate Energy has agreed to install an FSRU off the coast near Port Qasim by the end of Q1 next year, which it will lease to Pakistan for 15 years, Daniel Bustos, Excelerate’s chief development officer, told Interfax. Meanwhile, Pakistani conglomerate Engro Corp. is laying the pipelines and other infrastructure needed to deliver the LNG into the market, under an LNG service deal it reached with state distributor Sui Southern Gas Co. earlier this year. In addition, consultancy FGE was appointed in September to advise the government in negotiations for “viable and competitive” LNG supplies. These agreements have given the project considerable momentum following years of corruption scandals and other setbacks. “Previously, the government always tried to get the supply before putting the terminal in place, and that brought delays over and over again,” said Bustos. “What they’re doing now is running the process in parallel, but they started with the terminal. The big advantage of that is that when the suppliers see the terminal is a reality, they get more aggressive in dealing with the customers and are more willing to close a deal,” he added. The FSRU will have the capacity to store 151,000 cubic metres and import 3.5 mtpa, or 11.3 million cubic metres per day (MMcm/d). According to Engro, the volume would reduce Pakistan’s gas shortfall of 45.3 MMcm/d by 25%. ---. Domestic output – the country’s only source of gas at present – declined from a 10-year peak of 41.2 billion cubic metres in 2012 to 38.6 bcm in 2013, according to statistics from BP. The need for more gas could underpin the development of a second terminal close behind the Excelerate FSRU, Bustos said. Local news reports in September said Sui Southern Gas planned to issue a tender within weeks for a 5.7 MMcm/d regasification facility. “It’s a market that has tremendous possibilities to grow,” said Bustos. “Pakistan is following in the path of Argentina and Brazil in terms of continuing to add units – once they start seeing the benefits of FSRUs, they keep going back to the same concept.”Credit problems While the terminal’s development appears to be moving ahead, it is harder to discern any progress in the government’s LNG supply negotiations – although the finance minister said it is looking to secure the full 3.5 mtpa. Islamabad has been in discussions with Qatar over the past few years, but the seller’s demand for a high oil-linked price was reportedly an issue when the two sides met in July. There have also been suggestions Pakistan is beginning talks with Malaysia’s Petronas, which is expanding its large Bintulu LNG complex. However, Pakistan’s ability to sign deals for long- or short-term LNG is questionable, particularly because the country’s credit risk would require it to pay more than already high Asian LNG prices. “As a marketer of spot LNG, your main concern is your buyer’s creditworthiness, and we’ve seen other credit-insecure LNG buyers such as Argentina having to pay for cargoes with cash in advance – that precedent is already set,” said Benjamin Gage, an associate director of global LNG at IHS.------“The project will be subject to scrutiny and it will be closely watched, particularly in the context of intensified pressure on the government over its record of attracting investment and bolstering energy security, and as opposition parties seek to seize on opportunities to weaken government credibility,” said Fry.

Highlighting various activities, HP Cogen-Pak Project Director Omar Malik said the programme is currently working in collaboration with 35 sugar, 14 financial institutions and five technology providers, while seven bankable feasibility studies are already under way. Assessment for the pipeline and capacity building of Pakistani boiler manufacturers is also expected to start in December this year.While talking to The Express Tribune, Malik said that it is to promote sustainable production of energy for export of surplus electrical power to the national grid through replication of existing technologies in the sugar sector.“We are also trying to mobilise relevant public sector authorities for the formulation of a regulatory regime for bagasse based power projects,” he said. “Training of technical staff of sugar mills on standardised design and technology selection is also part of the process.”The event was attended by representatives of the Ministry of Water and Power, National Electric Power Regulatory Authority, Private Power Infrastructure Board, Alternative Energy Development Board, State Bank of Pakistan, Climate Change Division, Pakistani boiler manufacturers and sugar mill representatives.Pakistan’s sugar sector has an annual availability of 4.4 million metric tons of bagasse, sugar mill waste.To generate heat and electricity for its energy needs, sugar sector is using inefficient low pressure cogeneration system, consuming 46% more bagasse compared to the High Pressure Cogeneration.

ISLAMABAD: Federal Minister for Planning, Development and Reforms, Ahsan Iqbal Tuesday said that Energy projects of 16600 Mega Watt (MW) signed under Pak-China Economic Corridor during recent visit of the Prime Minister to China would help overcome energy crisis in the country.Addressing a press conference here, the minister said that the energy projects would be completed in two phases."During the first phase the energy projects of 10,400 MW electricity worth of $15.5 will be completed while in the second phase different projects of 6600 MW electricity will be concluded ", he said adding development of energy infrastructure and up-gradation of system of transmission lines was also included in the agreements.Ahsan Iqbal said that energy projects of 9000 MW would be completed by 2018 which would mean that the government would be able to eliminate power load-shedding in the country during its tenure.The minister said that coal-based power plants would generate 7500 MW and the cost per unit of electricity would be about 10 cents which would be far cheaper than that of oil.He said that under the Corridor, 1000 MW of the largest solar park would also be established in Cholistan while hydal based energy projects would be of 1600 MW.Giving details about Thar Coal Projects, the minister said that in the first phase two projects of 2000 MW would be developed from Thar Coal while under the agreements with China overall 6600 MW Thar Coal projects would be completedHe said that a package of $650 million was also included in the agreements for development of Gwadar sea port and airport.Iqbal further said that 1736 kilometers of railway track would be upgraded which would not only help to ease out transportation system of goods and coal but it would also help improving transportation facility for the passengers.The Minister strongly condemned Pakistan Tehreek-e-Insaf (PTI) Imran Khan's statement against Chinese development assistance to Pakistan under "China-Pakistan Economic Corridor" and said that Pakistan and China are closest friends and enjoy time tested all weather friendship."At a time when international investors were shying away from Pakistan due to security environment in the region, decision of Chinese and Pakistani leadership during PM Nawaz Sharif's visit to Beijing to take Pak-China relations to new heights in economic field through China Pakistan Economic Corridor Project is a milestone", he added.The most critical energy and infrastructure sectors related projects will infuse new life into Pakistan's economy, he added.He said the projects are in IPP mode as investment projects and rejected Imran Khan's assertion that these projects were being financed through borrowing.Iqbal said that these projects were coming under the energy policy which was open for all investors from any part of the world.

The politics related to liquefied natural gas (LNG) import have again intensified after Pakistan State Oil (PSO) cancelled an import tender in which top global companies like British Petroleum and Shell could have taken part.Similarly, many tenders were scrapped in the past, but this time experts were hoping for clinching a deal following encouraging response from renowned companies. But the same old episode has been repeated again.

Punjab Chief Minister Shahbaz Sharif and Petroleum and Natural Resources Minister Shahid Khaqan Abbasi left for Qatar, which could be a major source of LNG supply, soon after the PSO tender was cancelled.This has sparked speculation that the government has already planned to strike an import deal with Doha in a government-to-government contract through one of Prime Minister Nawaz Sharif’s close cronies, who has been residing in the Gulf Arab state for a long time.During the previous government of Pakistan Peoples Party (PPP), some ministers had reportedly alleged that the man had blocked a gas deal between Pakistan and Qatar. Despite signing of a memorandum of understanding (MoU) between the two countries, Doha at that time did not push ahead with the gas export programme.Speaking at a public rally, Awami Muslim League President Sheikh Rasheed Ahmed has also accused the PML-N government of favouring some blue-eyed boys in Qatar through a state-to-state LNG contract with Qatar Gas. He said the government was going to strike the LNG deal with Qatar through one of premier’s cronies, Saifur Rehman, who is residing in Doha.He also pointed out that the government seemed to be in a hurry as it had assigned the special task of finalising an agreement to Pakistan’s ambassador-designate to Qatar.These speculations seem to be spreading after the chief minister of Punjab went to Doha and met top officials. Then the minister of petroleum joined him.This suggests two important things. First, the chief minister has a key role in reaching an LNG deal with Qatar and second, the government has made up its mind for an agreement with Qatar and PSO’s tender was mere eyewash.However, with these developments, Pakistan is going to lose the opportunity of importing LNG at a competitive price. Now, the ball is in Doha’s court and it can demand a price of its choice.

During the previous PPP government, Qatar had revised downwards the LNG price offer to $17.437 per million British thermal units (mmbtu), a 0.5% discount over the previous price of $18.002. This would have led to savings of $1 billion over the 20-year lifetime of the project.If all charges are included, LNG supplies from Qatar will cost $19.521 per mmbtu and Pakistan will have to spend $200 million on developing infrastructure for handling imports.Another tenderSeparately, in response to a tender floated by Sui Southern Gas Company (SSGC) for an LNG integrated project, Pakistan Gas Port had offered a bid of $17.7074 per mmbtu while Global Energy International quoted a price of $18.16 per mmbtu.According to officials, if the government had awarded the contract to the lowest bidder, the price would have stood at $10 per mmbtu following a sharp fall in oil prices in the world market. These prices were even lower than the revised price quoted by Qatar.

Pakistan’s Engro Vopak LNG terminal will receive its first cargo in March from Qatar, the terminal’s Chief Executive Imranul Haque, told a Singapore conference this week.The terminal, near Karachi, plans to increase its capacity from 11 MMcm/d to 17 MMcm/d.http://interfaxenergy.com/gasdaily/article/15243/pakistan-first-lng-cargo

From Wall Street Journal: "Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants"

ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said.

“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”

An agreement with Qatar is expected by early March, Pakistani officials say.

---

The deal with Qatar would provide supplies over 15 years, Pakistani officials say. Pakistan is looking to import 3 million tons of LNG a year, beginning this year, with much or all of that coming from Qatar.

The country’s overall LNG imports are expected to rise to around 7 million tons annually within three years. It isn’t clear as yet how much of that higher total would be provided by Qatar.

Importing 3 million tons of LNG would cost around $1.5 billion annually, or some $22.5 billion over 15 years, given current global oil and gas prices, analysts say. That cost will fluctuate with the price of oil, which is also used to price LNG.

The Pakistani conglomerate Engro has built a terminal to import LNG at Port Qasim, on the edge of the southern city of Karachi, set to become operational at the end of March, officials say. Bidding is now under way to construct a second LNG terminal at Port Qasim.

Pakistani officials have been negotiating for months with state-owned Qatar Gas. The government of Qatar and Qatar Gas didn’t respond to requests for comment.

Pakistan’s electricity crisis has been caused partly by its reliance on importing furnace oil and diesel to fire its power stations, both relatively expensive fuels that will be replaced by the LNG. “LNG is more efficient and cleaner for the environment than the alternatives,” Mr. Abbasi said. “This is a major shift in our energy mix.”

According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.

Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.

The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.

----“This would be a positive development for Pakistan’s energy security. Qatar is a reliable and credible supplier,” said Anthony Livanios, head of oil and gas consultancy Energy Stream CMG. “For Qatar, this will help it diversify its customer base. So it’s a win-win situation for both countries.”

Qatar is the world’s biggest producer and exporter of LNG.

Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.

Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.

“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.

MANILA, Feb. 27 (UPI) -- The Asian Development Bank said Friday it was supporting efforts to help Pakistan build its first liquefied natural gas terminal with a $30 million loan.Pakistani company Engro Corp. will get funding from the ADB to build the regasification terminal at a port near Karachi. The plant will be able to convert as much as 3 million tons of LNG per year to gas for use in state power plants.

ADB investment specialist Mohammed Azim Hashimi said the loan would help Pakistan build a cleaner, more efficient and more diverse power sector.

"Pakistan urgently needs to utilize its existing power generation capacity fully, while reducing its reliance on costly imported diesel fuel for electricity generation," he said in a statement.

The Engro facility was approved for fast-track development earlier this week.

Pakistan's aging infrastructure means the country lacks a reliable power sector. The ADB in the past has lent its support to a multilateral natural gas pipeline that would strength from Turkmenistan.

The pipeline would draw from the Galkynysh natural gas field in Turkmenistan, one of the largest in the world.

The ADB describes the status of the power sector in Pakistan as "crippling." With the LNG facility, the bank said the Pakistan government would save about $1 billion per year on its fuel import bills. Cleaner burning natural gas, meanwhile, would help avoid 2 million tons of greenhouse gas emissions per year.

Addressing the meeting, Shahbaz Sharif said that all out efforts are being made to decrease the energy crisis. He said that besides traditional sources, energy projects are being executed through renewable methods. He said that a planning has been made for setting up energy projects through LNG in the province.

The chief minister said that the Punjab government has decided to set up an LNG power plant near Sheikhupura and more than 1,000-megawatt electricity would be generated from this plant. The Federal Cabinet has given approval to set up energy projects through LNG at three different places in Punjab and a total of 3,600 megawatts of electricity will be generated from these projects, he added.

Shahbaz Sharif thanked Prime Minister Nawaz Sharif and Federal Minister for Petroleum Shahid Khaqan Abbasi for granting approval to the provision of 200 MMCFD LNG to Punjab. He expressed the hope that a number of energy projects will be generating electricity during the next three years and the people will be provided relief from the current energy crisis. He said that every moment of the nation is precious and the energy projects will be executed transparently and speedily.

The Chief Minister directed that concerned departments should immediately take necessary steps for LNG power plants and work should be started for laying pipelines and up-gradation of transmission lines at the earliest. He said that energy projects of LNG would be completed on fast track. Shahbaz Sharif said that 100-megawatt solar project has been completed in a record period of six months at Quaid-e-Azam Solar Park, Bahawalpur. He said that it is the first and biggest solar project in the history of the country which, Punjab government, has set up from its own resources.

The chief minister disclosed that Prime Minister Nawaz Sharif would soon inaugurate the project. He said that work is continuing on the project and energy is being generated through indigenous coal with the cooperation of China in Salt Range. He said that all our resources would be provided to ensure speedy completion of energy projects. Muhammad Asif and Shahid Khaqan Abbasi assured every possible cooperation to the Chief Minister Punjab for the early completion of energy projects.

The first shipment of LNG is scheduled to arrive in Pakistan on 26 March 2015, according to local reports.

Sources suggest that Qatargas has sold the LNG to Pakistan at approximately US$8 – 9/million Btu.

The government of Pakistan is keen to secure supplies of LNG from Qatar to help ease the energy crisis that is currently plaguing the country. Last year, Engro Corp.’s subsidiary, Elengy Terminal Pakistan Limited (ETPL), won the contract to develop Pakistan’s first LNG import infrastructure within a 335-day deadline.

Engro Corp. prepared an exclusive article discussing the regasification project for the March 2015 issue of LNG Industry. In the article, Engro explained the extent of the energy crisis in Pakistan:

Pakistan’s demand for gas [is] expected to double in the next 10 years and current gas production at 4 billion ft3/d was less than the required 6 billion ft3/d. At the current rate of growth, the demand could touch 13 billion ft3/d by 2020.

If this happens, the energy conundrum in the country could well become an energy catastrophe. Towns and rural areas will be in perpetual darkness, and a majority of the industrial units will be forced to shut down or remain uncompetitive. Consequently, unemployment will increase, a greater majority of Pakistanis will fall below the poverty line, food inflation will become rampant, and social indicators will be well below that of sub-Saharan countries.

By this time, Pakistan will only be able to meet 41% of its energy requirements and will have an energy import bill of US$52 billion. With no end in sight, the repercussions of Pakistan’s ongoing energy crisis are severe and go well beyond threats to the country’s economic well-being and stability.

Hence, it is imperative to look for an alternative source of gas in Pakistan. Importing LNG will enable the government to save significant foreign exchange through import substitution of oil, and will alleviate the energy crisis plaguing the country.

Excelerate Energy’s Exquisite FSRU arrived in Karachi on Thursday carrying Pakistan’s first LNG imports, according to local media.The FSRU has been chartered by EngroVopak to be used as a permanent regasification vessel at Port Qasim for 15 years. Its installation marks the completion of the terminal, which has taken less than a year to build.The terminal was initially slated to come online in the first week of March, but negotiations for a supply deal between Pakistan and Qatar overran. An agreement was reached on 13 March, although details on prices and volumes remain confidential.The Pakistani government was under considerable pressure to finalise a deal as it would have been liable to pay penalties of $272,000 per day to Engro if an agreement had not been in place by the beginning of April.

China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan’s acute energy shortage, under a deal to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials said.

The arrival of President Xi Jinping is expected to showcase China’s commitment to infrastructure development in ally Pakistan, at a time when few other countries are willing to make major investments in cash-strapped, terrorism-plagued, Pakistan.

The pipeline would amount to an early benefit for both Pakistan and Iran from the framework agreement reached earlier this month between Tehran and the U.S. and other world powers to prevent Iran from developing nuclear weapons. The U.S. had previously threatened Pakistan with sanctions if it went ahead with the project.

The pipeline will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants. Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline, which will cost up to $2 billion.

Tehran says that its 560-mile (900-kilometer) part of the pipeline from an Iranian gas field is complete. Iran has long pressed Pakistan to build its half of the scheme.

Pakistan hasn’t begun construction, however, in light of threatened sanctions from the U.S. for trading with Iran. Islamabad had been trying to work around the sanctions by asking the Chinese to construct the pipeline but not yet connect it to the Iranian portion. The prospect of an Iran nuclear agreement, which would ease the sanctions in stages once the deal is completed, has given Islamabad further impetus to clear the project. Among the first restrictions to be lifted, according to the framework accord, would be prohibitions on Iranian energy exports.

“This [Iran nuclear agreement] will help us in getting a few things which were coming into the way of the Iran-Pakistan gas pipeline to be cleared and we will move forward,” Pakistan’s ambassador to Iran, Noor Muhammad Jadmani, said Sunday in Tehran, according a report on IRNA, the official Iranian news agency.

Pakistan is negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to build 435 miles (700 kilometers) of pipeline from the western Pakistani port of Gwadar to Nawabshah in the southern province of Sindh, where it will connect to Pakistan’s existing gas-distribution pipeline network.

China Petroleum Pipeline Bureau referred questions to CNPC, which didn’t respond to a request for comment.

The cost would be $1.5 billion to $1.8 billion for the pipeline, or $2 billion if an optional Liquefied Natural Gas terminal at Gwadar is included in the scheme. Under the deal, 85% of the financing will be provided by a Chinese loan, with Pakistan coming up with the rest.

The remaining 50 miles (80 kilometers), from Gwadar to the Iranian border, will be built by Pakistan. The pipeline, which would take two years to build, would eventually supply Pakistan with enough gas to fuel 4,500 megawatts of electricity generation—almost as much as the country’s entire current electricity shortfall.

The pipeline would give Iran a market to its east for its gas. The pipeline scheme, conceived in 1995, originally was supposed to extend to India. Tehran blames U.S. pressure for India dropping out in 2009.

China’s state-owned Power Construction Corporation and Qatar’s Al Mirqab Capital are to jointly invest in a $209m coal-firedpower plant project in Pakistan, the firms have announced.The plant is to feature two 660 MW supercritical units and will be built in Karachi, at Pakistan’s second-largest port, Port Qasim. The bulk of the fuel is to be shipped in from Indonesia. Power Construction Corporation, which is set to build the project, aims to complete it in 32 months.Of the $521m project capital, 51 per cent is to be invested by Power Construction Corporation and 49 per cent by Al Mirqab Capital, with the remaining $1.56bn to come from loans. The companies said the plant will be constructed and run on a build-own-operate model.In a statement, Power Construction Corporation said: “The Pakistan Port Qasim power project is a large energy project of great political and economic importance between the two countries, as a high-priority project of the China-Pakistan Economic Corridor. This project fits the company’s development strategy and investment direction”.

Pakistan currently suffers from an energy shortfall of around 5 GW. The 3000 km, $45.6bn Economic Corridor project, which aims to connect Pakistan’s southern Gwadar Port with China’s northwestern Xinjiang region, includes plans for a gas pipeline from Iran to Pakistan, on which construction work has already begun although a formal deal won't be signed until later this month. According to reports, the pipeline could eventually provide Pakistan with enough fuel to generate around 4.5 GW of power.In February Pakistan shelved a planned 6.6 GW coal-fired power project after Chinese investors backed out, citing lack of adequate infrastructure.

Currently, Pakistan is working on two pipelines to transport re-gassified LNG from Karachi to the northern parts of the country. The first is a pipeline that will connect the Gwadar Port to the main natural gas pipeline hub in Nawabshah. The second will lay a direct pipeline from Karachi to Lahore.

The government has signed an initial deal with China to award a $3 billion LNG terminal and pipeline project to a Chinese contractor in a similar financing-for-guaranteed-contract arrangement.

Islamabad had initially offered Moscow and Beijing a similar arrangement for the Iran-Pakistan pipeline, but American and European sanctions against Tehran scuttled that project – at least for now.

An LNG import terminal, owned and operated by the Engro Corporation, an industrial conglomerate, is already up and running, though there is, as yet, no agreement to import natural gas from Qatar, the third-largest natural gas producer in the world and closest to Pakistan. There is also no infrastructure yet that would allow that natural gas to be transported upcountry.

“We are negotiating an LNG supply deal with Qatar which will be finalised soon,” Abbasi said.

Pakistan’s existing pipeline network has the capacity to transport 320 million cubic feet of gas per day (mmcfd) in re-gassified LNG. Consumption in Punjab and Khyber-Pakhtunkhwa, as well as upper Sindh, however, exceeds 3,000 mmcfd, which is why the new pipelines are badly needed.

In order to finance the payback of the loans needed to construct the pipelines, the Oil and Gas Regulatory Authority (Ogra) has allowed the state-owned gas utilities, Sui Northern Gas Pipelines (SNGP) and Sui Southern Gas Company (SSGC), to start charging consumers more for their gas bills every month. SNGP and SSGC are expected to invest $750 million and $300 million respectively to finance the LNG pipeline.

The owner of the world’s largest hydroelectric dam, China Three Gorges Corporation, is willing to participate in a financing consortium to fund up to $50 billion of hydroelectric power projects in Pakistan.

The Chinese government-owned CTG expressed an interest in financing projects in Pakistan in conjunction with the International Finance Corporation, a World Bank subsidiary. This disclosure was made at the meeting of the Cabinet Committee on Energy on June 18. The offer comes on top of the $46 billion in financing for power and transportation infrastructure being provided by the Chinese government and Chinese banks to Pakistan for the construction of the China-Pakistan Economic Corridor (CPEC).

If the offer pans out, it would make China the biggest financier of infrastructure in Pakistan by far. CTG owns and operates the Three Gorges Dam, the world’s largest hydroelectric power plant with a capacity of 22,500 megawatts, nearly matching in one power plant the entire installed capacity of the Pakistani grid of 23,500 MW.

Read: China-Pakistan Economic Corridor: Lines of development – not lines of divide

According to studies conducted by the Water and Power Development Authority, Pakistan has an identified potential of producing up to 60,000 MW of hydroelectric power, of which 40,000 MW is located in a region called the Indus Cascade, which begins in Skardu in Gilgit-Baltistan and runs through to Tarbela, the site of Pakistan’s biggest dam, in Khyber-Pakhtunkhwa.

The biggest project the government has already identified and begun preliminary work on is the Diamer Bhasha dam, which would require $15 billion to construct and would have a nameplate capacity of 4,500 MW.

Pakistan’s energy sources have gone through cycles. Up until the 1980s, the bulk of electricity in Pakistan came from hydroelectric power. In 1994, as the country’s energy needs surged, the government initiated a policy to attract private investment in thermal electricity. Oil prices were low in that decade and so the government made the decision to use oil-fired power plants, a decision that proved costly when oil surged to $100 a barrel, prompting Islamabad to search for cheaper ways of producing electricity. Among those cheap ways is hydroelectric power and coal-fired thermal electricity.

Among other projects the government wants to seek Chinese financing for is the Neelum-Jhelum power project in Azad Kashmir. The 969 MW Neelum-Jhelum hydroelectric power project has been facing rising costs, mainly due to the delays caused by a lack of funding. The project was initially slated to cost $1.8 billion, but will now cost $4.2 billion due to the delays, a major cause of concern for its initial consortium of Middle Eastern financiers which included the Islamic Development Bank (IDB), the Kuwait Fund for Development (KFD), the Saudi Fund for Development and the OPEC Development Fund.

The government now expects to raise Rs100 billion ($1 billion) in local borrowing for the plant, in addition to $576 million in foreign borrowing. The government has approached the state-owned National Bank of Pakistan to arrange financing for the local currency component. The Middle Eastern lenders have so far committed $692 million, of which they have disbursed $260 million so far.

“The disbursement of the remaining $433 million has been stopped by the lenders as they are demanding that the contractors should provide performance guarantee for the additional work (variation orders) and cost escalation,” said one source familiar with the cabinet’s deliberations on the matter.

Energy is a critical element in our lives and positive developments are taking place in energy sector of Pakistan. Four to five years from now, our country will have a significant energy growth as many big projects are in the pipeline, said Syed Asad Ali Shah, former advisor finance, Sindh, on Tuesday.

“One of the greatest achievements of this government is to import LNG through LNG terminals, which have been completed laying down in March this year. LNG import is becoming streamlined. It will very much help redress energy crisis,” he said while speaking as a guest of honor in Conference on Entrepreneurial Engineering Opportunities in Renewable Energy for Self Sufficiency organized by College of Engineering Sciences, Institute of Business Management (IoBM).

He said apart from achievement in LNG sector, oil prices had also crashed which would boost overall production of the country. Shah said integration in energy sector was a much needed. All the companies working in silo should be controlled and monitored by one single body. “It is unfortunate thing that our country has been relying on imported fuel to generate electricity, while, our country is blessed with many resources and one of them is huge reserves of coal. I see positive development in Thar coal as Engro Corporation and Habib Bank Limited will be working on it,” he said.

He said hopefully, sanctions on Iran would be soon lifted and Iran-Pakistan (IP) Gas project would become reality. Prime minister of Pakistan has also discussed energy issue with Turkmenistan in his recent visit. We are generating 100mw electricity from wind corridors, which have the capacity of thousands mega watt. We also have great potential of solar energy if used properly,” he said.

Senior Executive Director Osmani & Co Dr Akhtar said Europe and America had excelled in wind and PV solar energy as renewable energy, while coal, gas and oil are vanishing in those countries. Germany’s single largest energy production is solar and we were not getting benefit of this natural resource despite abundance of it in our country.

He said wind and PV solar energy should be used by choice rather than compulsion. Karachi was going to be dark in the smoke of pollution and electric vehicles were the solution for this.Managing Director Systek (Pvt) Ltd Navid Ansari said energy gap is third world countries like Pakistan could not be overcome in near future. Solar energy could be immediate, affordable and abundant alternative source.

Member (Energy) of the Planning Commission, Ministry ofPlanning, Development & Reforms, Syed Akhtar Ali said pricing on PV solar products should be lowered to promote the product. The government needed to lower duties on local production to make it viable.

#Chinese company to build #LNG gas pipeline projects in #Pakistan that will also connect with #Iran. #CPEC #China http://www.dawn.com/news/1209970

A Chinese firm will be awarded the contract to build $2.5 billion Gwadar liquefied natural gas (LNG) and the Iran-Pakistan gas pipeline in November, Interstate Gas Systems (ISGS), who opened the technical bid for the construction of projects told media personnel on Wednesday.

Mubeen Saulat, ISGS managing director, said that the Chinese state firm China Petroleum Pipelines Bureau (CPP) has submitted technical and commercial bids in accordance with the Public Procurement Regulatory Authority (PPRA) rules. While ISGS, after scrutinising the documents opened the technical bid adding that the commercial bid will be opened in November.

Related: Iran Pakistan gas pipeline to be completed by 2017

CPP will construct the terminal with a capacity to handle 500 mmcfd (million cubic feet per day) of LNG and a floating storage gasification unit. It will also build the 700 kilometre long Gwadar to Nawabshah pipeline.

"The dual projects will be completed at the cost of about $2.5 billion, 85 per cent of the investment will be done by the Chinese company while government of Pakistan will provide 15pc of equity," said Saulat.

The ISGS official also added that the CPP will acquire a loan from Exim Bank which Pakistan will repay in the coming years through the revenue earned from the project.

The pipeline and terminal will be secured by Pakistani security agencies while the Chinese camp will be safeguarded by a Chinese security company.

The CPEC, with a planned portfolio of projects totalling around $46 billion, will link Gwadar, Khuzdar and other areas on way to Dera Ghazi Khan, Dera Ismail Khan and Peshawar along its central route.

The eastern route will connect Gwadar to Ratodero, Sukkur, and Karachi and upward to cities in Punjab, and from there to Khyber Pakhtunkhwa and the Khunjerab Pass.

Linking Gwadar to the rest of Pakistan and the western Chinese city of Kashgar, 3,000 kilometres away, will involve major infrastructure work in Balochistan.

GE, Harbin to Provide Large, High-Efficiency Gas Power Plant to Meet Energy Demand in #Pakistan at Bhikki 1.1GW http://www.businesswire.com/news/home/20151014005988/en/GE-Harbin-Provide-Large-High-Efficiency-Gas-Power#.Vh7eahCrS8U … Bhikki Combined-Cycle Power Plant Marks the First HA Order in the Middle East and North Africa Region and the 20th and 21st HA Orders WorldwideNew Project Furthers GE-Harbin Technical Collaboration in Providing Competitive Power Plant Solutions WorldwidePunjab Government Creating What is Expected to be the Largest, Most Efficient Power Plant in Pakistan, Helping Area Meet Growing Power DemandThe Bhikki plant will be able to generate the equivalent power needed to supply more than six million Pakistani homes, and is likely to be the largest, most efficient power plant in Pakistan. It is expected to enter commercial operation in 2017. This project marks the first HA orders in the Middle East and North Africa region and the 20th and 21st worldwide. GE’s 9HA is the world’s largest, most efficient gas turbine.

“We are committed to meeting the growing demand for power to drive industrial growth and all-round economic progress as well as to promote the welfare of our people,” said Ahad Khan Cheema, CEO, Quid-e-Azam Thermal Power Limited, on behalf of the government of Punjab. “As part of this, we are not only investing in new plants but also strengthening public-private collaboration to ensure that advanced technologies are deployed to meet the growing demand. GE and Harbin are moving forward with an accelerated time frame to add additional power to the grid.”

Joe Mastrangelo, president and CEO, gas power systems at GE Power & Water added, “The Bhikki project is another testament to the long-term commitment of GE to serve as an active partner in helping to meet Pakistan’s development needs. We have established strong partnerships in the power sector, and the introduction of our HA gas turbines, a significant first for the region, underlines our focus on bringing the latest technologies to enhance the operational efficiency and productivity of power plants.”

“The Bhikki combined-cycle plant is a strong example of technical collaboration between GE and Harbin in providing the most advanced combined-cycle power plant solutions,” said Mr. Guo Yu, chairman of HEI. “Deploying GE’s advanced HA technology is a game changer for the industry as it supports the government’s goal to ensure affordable, reliable and efficient power generation to meet growing demand.”

With the Bhikki plant, 21 HA units have been ordered and 68 HA units have been technically selected1 by customers around the world. GE’s H-class technology has been embraced by customers in Korea, Japan, the United Kingdom, Brazil, the United States, France, Russia, Germany, Turkey, Egypt, Pakistan and Argentina.

GE’s HA gas turbines provide a combination of the most output, highest efficiency and best operational flexibility and lead the industry in total life cycle value. The 9HA.01 offers a net combined-cycle efficiency of more than 61 percent and leads the industry with cleaner, reliable and cost-effective conversion of fuel to electricity.

The 9HA gas turbine completed off-grid, full-speed, full-load validation testing in January 2015 at the world’s largest, most thorough gas turbine test stand located at GE’s manufacturing facility in Greenville, South Carolina. This testing facility has attracted industry visitors from around the world.

Among key agreements in the country, GE has signed a memorandum of understanding with the government to develop Pakistan’s energy resources to meet the projected demand of 54,000 megawatts by the year 2020. GE will assist the government in achieving its goals by engaging in Pakistan's energy, transportation and water sectors and will work to identify potential sources of funding and explore potential investment opportunities in those sectors.

Minister for Finance Senator Ishaq Dar on Sunday said that the government would be able to overcome the energy crisis by early 2018 by adding 10,000 megawatts more electricity to the national grid.

“Currently we are facing a shortfall of about 5,000 MW of electricity whereas energy projects of 24,000 MW are under process and some of them will start generating 10,000MW by the end of year 2017 or early 2018,” he said while addressing a ceremony organized by Old Hailians Association here.

The remaining projects of 14,000MW, he said, would start adding electricity to the system by 2020 which would help boost economic activity and industrialisation in the country.

The minister said two mega hydro power projects, Dasu and Diamir Bhasha dams, were also in progress, which would not only help overcome the energy crisis but also store water for irrigation purpose.

“Diamir Bhasha Dam will have the capacity of 1.3 trillion cubic feet water,” he added. Ishaq Dar said the government was also working on civil nuclear energy projects, which would add 1,000MW electricity to the system in next seven years. He said that before the year 2013, the country was on the verge of becoming a defaulter as the foreign exchange reserves had gone down to below $8billion and no international monetary institution was ready to lend money to it.

However, the Pakistan Muslim League-Nawaz (PML-N) after coming to power, worked hard to bring the country out of the financial crisis, he added.

“Within a short span of two years, the country has made immense progress as the energy crisis has considerably eased, forex reserves have touched $20 billion mark, a record in the country’s history, fiscal deficit has come down from 8.8 percent to 5 percent, and inflation rate has reduced from above 10 percent to record 1.3 percent.”

Moreover, the minister said, the tax to GDP ratio had also increased from 9 percent to 11 percent and revenue growth rate also surged from 3 percent to 15 percent. Now the world renowned fiscal institutions were praising Pakistan for its amazing economic development and had rated its economy as stable, he added.

Dar said if Pakistan continued its journey on the road to progress which it had witnessed during previous two years, it would become the world’s 18th major economy in 17 years.

He said that the PML-N was strictly implementing its manifesto announced during the 2013 general election, in which it had vowed to steer the country out of four crises.

“The country was facing 4 E challenges ( Economy, Energy, Education and Extremism) at the time the PML-N government came into power, which have now been overcome due to its prudent policies,” he added.

Minister for Finance Senator Ishaq Dar on Sunday said that the government would be able to overcome the energy crisis by early 2018 by adding 10,000 megawatts more electricity to the national grid.

“Currently we are facing a shortfall of about 5,000 MW of electricity whereas energy projects of 24,000 MW are under process and some of them will start generating 10,000MW by the end of year 2017 or early 2018,” he said while addressing a ceremony organized by Old Hailians Association here.

The remaining projects of 14,000MW, he said, would start adding electricity to the system by 2020 which would help boost economic activity and industrialisation in the country.

The minister said two mega hydro power projects, Dasu and Diamir Bhasha dams, were also in progress, which would not only help overcome the energy crisis but also store water for irrigation purpose.

“Diamir Bhasha Dam will have the capacity of 1.3 trillion cubic feet water,” he added. Ishaq Dar said the government was also working on civil nuclear energy projects, which would add 1,000MW electricity to the system in next seven years. He said that before the year 2013, the country was on the verge of becoming a defaulter as the foreign exchange reserves had gone down to below $8billion and no international monetary institution was ready to lend money to it.

However, the Pakistan Muslim League-Nawaz (PML-N) after coming to power, worked hard to bring the country out of the financial crisis, he added.

“Within a short span of two years, the country has made immense progress as the energy crisis has considerably eased, forex reserves have touched $20 billion mark, a record in the country’s history, fiscal deficit has come down from 8.8 percent to 5 percent, and inflation rate has reduced from above 10 percent to record 1.3 percent.”

Moreover, the minister said, the tax to GDP ratio had also increased from 9 percent to 11 percent and revenue growth rate also surged from 3 percent to 15 percent. Now the world renowned fiscal institutions were praising Pakistan for its amazing economic development and had rated its economy as stable, he added.

Dar said if Pakistan continued its journey on the road to progress which it had witnessed during previous two years, it would become the world’s 18th major economy in 17 years.

He said that the PML-N was strictly implementing its manifesto announced during the 2013 general election, in which it had vowed to steer the country out of four crises.

“The country was facing 4 E challenges ( Economy, Energy, Education and Extremism) at the time the PML-N government came into power, which have now been overcome due to its prudent policies,” he added.

Russia agreed to build and possibly run a planned natural gas link in Pakistan as President Vladimir Putin seeks to bolster the country’s influence in the Middle East and Asia.The countries signed an intergovernmental agreement for a pipeline that would connect liquefied natural gas terminals in southern Pakistan and its energy-hungry north, with construction to be completed by late 2017, Pakistan’s Petroleum Ministry said in a statement Friday. The line will reach its project capacity by early 2020, Russia’s Energy Ministry said in a separate statement. A unit of Russia’s Rostec State Corp. will manage the project and invite foreign investors, including China, to participate.Putin is seeking allies in Asia and the Middle East in an effort to break out of international isolation caused by the Ukrainian crisis, while Russia’s military build up in Syria has contributed to tensions, especially with the U.S. The deal with Pakistan comes after more than a decade of talks about gas-pipeline projects.“Construction of the North-South pipeline brings trade and economic cooperation of Russia and Pakistan to a new level,” Russian Energy Minister Alexander Novak said in the statement. He and his Pakistani counterpart Shahid Khaqan Abbasi signed the accord in Islamabad in the presence of Prime Minister Nawaz Sharif, according to the statement.Russia is studying funding from Russian and Chinese development banks for the link, the ministry in Moscow said without elaborating. A project company, set up by potential investors, will own and run the 1,100 kilometer (684 mile) pipeline over 25 years, according to the statement.The link would ship as much as 12.4 billion cubic meters of gas per year, which is about 30 percent of Pakistan’s current consumption.

SINGAPORE, Oct 30 (Reuters) - Producers and importers of liquefied natural gas (LNG) are preparing to trade the fuel more actively on a spot basis as a looming supply surplus threatens to overwhelm decades-old bilateral contracts and pressure prices lower.

With the advent of 130 million tonnes of LNG capacity in Australia and North America by 2020, producers such as Woodside Petroleum and Chevron, and traditional buyers such as Japanese utilities, have expanded trading teams to handle excess cargo flows and navigate a more open market.

Australia, with investments of almost $200 billion in new production, is on track to overtake Qatar as the world's biggest LNG exporter before the end of the decade.

In North America, U.S. company Cheniere Energy plans to export its first LNG cargo in January, and Canada is also planning to start exports in the next few years.

"Buyers will be able to have their choice ... (of) very large supply sources that can deliver pretty much at a moment's notice," Cheniere Chief Executive Charif Souki said this week at a conference in Singapore.

Excess supply, along with rising demand, is key to establishing a liquid commodity market as in tight conditions producers and consumers tend to enter long-term fixed supply agreements rather than trade openly.

And while new demand is popping up in countries such as Jordan, Dubai, Egypt and Pakistan, it is unlikely to be enough to offset the slower-than-expected consumption growth in China and the falling demand in top importers Japan and South Korea.

Some major players in the industry disagree, though, on how quickly a robust spot market will develop.

Last year, less than 5 percent of total volumes were sold on a prompt delivery spot basis, said Ann Collins, vice president for LNG at BG Group, at Gastech on Thursday.

"A rapid tilt towards a commoditization of LNG seems unlikely in the near term," she said.

Still, Ernst and Young (EY) says liquefaction capacity has more than doubled since 2000 and exceeded demand last year.

This surplus, along with slow-growth demand, will keep prices under pressure until the end of the decade, consultancy Wood Mackenzie said in statement this week.

BUYERS TO SELLERS

Japanese power utilities - traditionally strictly buyers of LNG for gas-fired generators - are selling to each other or reselling to emerging smaller local buyers, even as nuclear reactors restart and the country's overall electricity demand falls with a shrinking population.

Japan's JERA Co, a joint venture set up by Tokyo Electric Power and Chubu Electric Power, will renew only a minimum of the long-term contracts that supply 80 percent of its gas, and instead meet its needs via mid-term and short-term contracts or spot purchases.

Australia's Woodside, one of the biggest producers of LNG, has traditionally sold its volumes on contracts that last 20 years or more, yet now says it needs more LNG tankers to deal with rising spot and short-term sales.

Chevron, which up to now has also dealt mostly in long-term supply agreements, has established an LNG trading desk in Singapore to handle output - mainly from its Australian projects - that is not committed to buyers.

Commodity trading houses are also getting ready for the increase in supply, with Glencore planning to double its trading team as it mounts a challenge to rivals Trafigura and Vitol to become the top merchant LNG trader.

In a report prepared for Gastech 2015, Wood Mackenzie outlines the key levers which will determine the global gas floor price as the market absorbs a wave of LNG. With 130 million tonnes per year (mmpta) of additional LNG supply set to reach market over the next five years, coincident with faltering China demand, Wood Mackenzie asserts that new local floors for spot prices will be tested, unlocking new demand and curtailing supply, with global pricing implications.Mr Noel Tomnay, Head of Global Gas & LNG research for Wood Mackenzie sets the scene: “The last LNG oversupply between 2008-10 came about when Qatar ramped up its LNG output and the market had to absorb 50 mmtpa of new LNG, at a time when demand growth had slowed. As a result, gas spot prices in Europe traded under US$4 per million British Thermal Unit ($/mmbtu) through the summer of 2009 and with no market in Asia, those prices were still enough to attract LNG cargoes to Europe, including from Australia.”“The LNG market is facing another oversupply which is likely to be deeper and will persist for some years. Prices in Asia will be lower than in Europe, and at their worst, between 2017-19, while prices in Europe will not reach a low point until 2020. The key question the industry is wrestling with is: how low will prices go?” Mr Tomnay asks.Wood Mackenzie’s report , titled ‘Global gas prices – what will set the floor?’ asserts that China’s market policies will be key. While more new LNG markets will emerge with lower gas prices, particularly if oil prices climb, more liberalised market conditions in China could enable it to absorb a lot more LNG, mitigating the impact of the LNG oversupply on price. This includes improved regasification infrastructure access, reductions in regulated gas prices and allowing the curtailment of high cost indigenous gas. Mr Tomnay elaborates: “It is likely that output from some high cost gas will be curtailed but protectionist measures will restrict China’s willingness to fully replace indigenous gas with lower priced LNG, dampening the potential supply response.”New demand for gas and LNG could be created through the displacement of coal in power generation, a theme which will be central to Mr Tomnay’s presentation at Gastech 2015’s Market Outlook session on Wednesday. The gas price at which coal will be displaced, a soft floor for gas prices, will be determined, in part, by the price of coal. “Assuming higher ARA coal prices in Europe of US$70/tonne and Japanese coal prices of US$80/t (CFR), a floor price for gas in Europe and Asia should be maintained at prices above US$5.00/mmbtu. This should be sufficiently high to avoid US LNG being shut-in,” Mr Tomnay explains.However, lower coal prices, possibly a consequence of reduced demand through displacement by gas, risks pulling both gas and coal prices down further Wood Mackenzie says. “At prevailing ARA coal prices of US$50/t and Japanese coal prices of US$60/t CFR, a floor price for gas in Europe and Asia could go down to prices at which many US LNG exports fail to cover cash costs, around US$4/mmbtu. This would force US LNG exporters to consider shutting-in for periods, a move which would depress US gas prices,” Tomnay adds.Lastly Mr Tomnay explains why the behaviour of major suppliers, most notably Russia, will be key: “We could see major suppliers withdraw gas from the market, thereby supporting LNG spot prices. It was Gazprom’s withdrawal of 20 bcm per annum of pipe gas from Europe between 2008-10, equivalent to 15 mmtpa of LNG, that prevented spot prices from remaining low. At periods of severe oversupply, Russian gas supply behaviour will again be key to gas price formation in Europe – and this time in Asia and even the US too.”Source: Wood Mackenzie

Spurred by the gas demand growing to over six billion cubic feet per day (cfd) and depleting hydrocarbon resources, the government has adopted a multi-pronged strategy to ease Pakistan’s energy crisis.

It is importing liquefied natural gas (LNG) in addition to pursuing long-term projects such as the Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipelines.

According to an official source, previous governments too unsuccessfully tried to import LNG. They failed because they adopted an approach where the supplier was supposed to develop an LNG terminal.

“But the present government succeeded in providing the country with its first LNG-based gas within 20 months of coming to power,” he added.

The government pursued a transparent process for developing a terminal and Engro Elengy built the SSGC LNG regasification terminal in a record time – the contract was signed on April 2014 and first gas flow was ensured in March this year.

The source said the government needed to sign five more contracts to import LNG, as currently LNG caters to 20% of the country’s needs. The government plans to build one terminal at Port Qasim and another at Gwadar port to handle over two billion cfd of LNG

On the IP project, the government has done work on its part and is awaiting only relaxation or removal of international sanctions on Iran.

The government has also recently broken ground on the Tapi project, which had lingered on for the last 25 years. According to the official, the first gas flow from Tapi is expected in December 2019.

The government has also awarded several exploration licenses to discover more hydrocarbon resources and augment domestic production which is currently stagnant at four billion cfd.

Technorati

PakAlumni WorldWide

Odiogo Feed

About Me

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
www.pakalumni.com
http://www.riazhaq.com
http://southasiainvestor.blogspot.com